Foster Denovo head of business development (south) Dave Elliott argues it is generating and keeping client trust that will be the real drivers towards profitability for advisory firms.
The theme of trust within our sector is one that interests me greatly. Evidence exists that, if a practitioner develops truly deep and long lasting trusted relationships with their clients, those clients are likely to engage fully and take more advice.
And because the relationship is deep and personal, the cost of the advice is less of an issue. Done well, the adviser then finds themselves in the enviable position of having clients who proactively advocate on their behalf.
When it comes to trust, many think that it is a subconscious human process, and fail to appreciate that there is some science behind it. There is, for instance, a formula or equation promoted by Charles H Green and Robert Galford in their book 'The Trusted Advisor', which allows the adviser to create a numerical strength value to their own trustworthiness - an interesting exercise to undertake.
I have recently argued that I believe that the demands that the Retail Distribution Review (RDR) made of advisers has forced them to focus considerable time on themselves, possibly at the expense of these important client relationships.
The need to get qualified, the need to build a robust, repeatable and profitable proposition and a largely financial approach to valuing future client worth as part of client segmentation exercises, has little to do with the client and everything to do with the adviser themselves.
Now I'm not suggesting these actions are wrong - clearly they were pre-requisites for life in the RDR world - but I would argue that you can have all the qualifications under the sun and an excellent proposition delivered by great processes and technology, but these will not deliver a profitable business on their own if there is insufficient focus given to developing those deep, trusted relationships.
I believe the advisory community already hold the high ground when it comes to being trusted compared to other financial sectors who are currently deeply unpopular.
But I also believe forward-looking advisers are starting to see an opportunity to use trust-based skills as a competitive advantage to increase revenues, improve profitability and gain new clients in the new world of advice and services rather than product sales.
'Right thing to do'
£69m spent on upgrades
European fintech market 'underserved'