Financial Adviser or Business People?

There are many financial advisers, and very few of them hold business qualifications. Equally, there are many business people who are strong financially; they tend to rely on accountants. The role of being both a financial adviser and a business person running a multi adviser business is counter-intuitive.

It may be intuitive to think that if a person knows so much about personal or corporate finance that they would also know how to run a business. Even more intuitive would be the idea that an accountant would be a natural business person, yet again this is not always the case.

Over the last twenty years, financial advice has developed into a specialist area of personal and corporate support and equal to that of an accountant or solicitor. This trio of accountant, solicitor and financial adviser have mutually independent skills, expertise and knowledge. Together they are a powerful combination to support any individual, SME or large corporate business. Every person will pay for services from at least one of these professions in their lifetime, if not all three, but it still does not mean they are good at running their own business.

The activities associated with running a successful company, such as staff management, planning, leading, motivating, monitoring, organising, developing and training are not the natural to the typical professional and more often, these required functions either get in the way or have to be learned as the business progresses in size.

With FCA regulation being so prominent in the financial advice business, a directly authorised firm will spend less time on client facing and client specific tasks and more time on existing in business.

Clients don’t see the amount of background work needed to progress a piece of advised business so as to satisfy compliance. Further, they see and understand even less of what a firm needs to do, just to exist. For example, a small firm of advisers that turns over £1m must hold £50,000 in reserves at all times.

Many financial advisers start their own directly authorised business, usually with another financial adviser. Their strategy may include expansion to recruit other financial advisers to their firm, yet little consideration is given to that complexity. A principal of a firm cannot both advise his clients and run a multi-adviser firm to any successful level, despite what many recruitment consultants may have them believe. As the number of advisers grows, time will be split between their own clients, the growing needs of their advisers, and their business. Stretched to breaking, the solution would be to recruit administration staff. This just simply extends the principal further and places tremendous strain on their efficiencies.

There is no doubt, that the greatest barrier to happiness and success is the attempt to both advise clients and build a multi-adviser business. This is an optional barrier influenced by the belief that it is possible, but you need to decide one direction or the other.

Financial advisers do not need to be businessmen or businesswomen to have a great, happy and fruitful business, providing they partner with a firm who are strong on the business side of the industry. Today, an adviser can work from home and spend every working hour of their choosing focused on their clients; in other words, ensuring they are efficient in business.