Survive or flourish? 

IFA firms have, similar to other sectors, struggled in COVID world, but the pandemic does not qualify as the substantive source of detriment in 2020.  Our various regulatory bodies had, between them, already seen to that.  The monumental mismanagement of the Professional Indemnity Insurance (PII) market, coupled with the mushrooming culture of redress welfare gave birth to the perfect storm.  Increases in the cost of this mandatory insurance kicked off at +250% and rapidly went stratospheric, whilst the terms went south.  It takes a peculiarly inept kind of regulatory interference to create this kind of systemic risk within the marketplace.  Intermediary firms already had plenty to cope with prior to COVID, and subsequent actions by our regulators have simply added to the misery.

Dynamic Planner (DP) have helpfully produced a report entitled 10 Learnings from Advice Firms Successfully Generating New Business in the Pandemic.  The report is the product of responses from the intermediary community to DP's questionnaire, and as you'd expect there's a fair bit of variety out there, in terms of how firms are coping at the present.  For some 13.8% of respondents, 'new business' has dropped off a cliff, but (at the other end of the spectrum) business has increased either plateaued, risen slightly or significantly for 53.8% of respondents.  This may tell us something about resilience, and also about business practices and models.  The report draws out ten 'learnings' which are both useful, whilst at the same time being completely obvious.  That is to say, there is little 'new' here - but the paper is helpful reminder of lessons that we really  ought to have learned already.  I'll reprise them below, in case you find something relevant:

  1. Most new business comes from existing clients - that is to say, those firms which were performing better had a strong focus on working with their existing clients;
  2. Those firms which were proactive in addressing their clients' COVID concerns were generating significantly more new business;
  3. Those firms which emphasised building rapport, trust and understanding generated higher new business;
  4. Offering a free initial consultation significantly improved new business;
  5. The use of 'open questions' during initial consultations leads to significantly higher new business;
  6. Technology - using video calls significantly improves new business;
  7. Most fee income is coming from (a) new money and (b) portfolio reviews;
  8. Emphasising your ongoing review service leads directly to increased new business;
  9. Technology - the use of online risk profiling generates a better new business outcome than the alternatives;
  10. Technology - digital/online completion of the FactFind can boost new business by +30%.
Many of our longstanding Members will be familiar with these kinds of emphases.  As I say, there is nothing much 'new' here, but in the following list, I'll outline the kinds of ValidPath Answers which are relevant:
  1. Our consistent emphasis on the core value of the client review;
  2. We have quite a bit of detailed guidance on responding to COVID implications;
  3. Since 2006, we've been consistently emphasising that successful IFAs adopt a 'trusted adviser' model;
  4. You'll find an example of a simple introductory freebie in the back of our Marketing Cookbook.  Alternatively, ValidPath's approved cashflow forecasting system makes it dead easy to offer a 'Your First Cashflow Forecast is on Us!' promo;
  5. ValidPath has plenty of detailed guidance on great fact-finding technique;
  6. Zoom users will soon be able to link directly into our practice-management system;
  7. I'm not sure there's anything especially insightful about this point!
  8. Here's another dollop of guidance, this time about MiFID II and client reviews.  Remember that we're working on the next level of functionality within our Client Portal to help you streamline your client review service and simplify the client experience;
  9. Our default risk-profiling solution allows the client to provide his own feedback, in his own time, online, and then immediately takes that information and enables you to translate that through to a suitable asset-allocation model, prior to conducting your granular investment research;
  10. ValidPath's preferred cashflow forecasting system allows you to collect all the client data digitally - and there's more coming soon with integrations!
(Most of the above are only available to logged-in ValidPathers)

During times such as this, it is only natural that our inclination is to focus on survival.  What the above summary indicates is that, within ValidPath, we have the essentials that should help you to not only survive but flourish, if DP's research is valid.  In closing, here are two more resources that you may find helpful - the second of which is brand new:

Kevin Moss, 05/08/2020