Time to Define your Adviser Model

You should hopefully be in a position to have settled on a suitable base structure on which to build your business. It could be for example:

  • Directly Authorised | Restricted Advice |Sole Trader Lifestyle Model
  • Registered Individual | Independent Advice | Sole Trader Lifestyle Model
  • Directly Authorised | Independent Advice | Multi-adviser Model

Whichever type of business model you decide on, it’s also important to clearly define why you’re interested in starting (or running) a self-employed business in the in the first place. Knowing why you’re in business will also give you the confidence and motivation you need to make it a happy journey; and therefore successful.

To maintain a sense of clarity, ask yourself the following seven questions to see whether you’re closer to being a lifestyle adviser or a directly authorised start-up multi-adviser financial adviser firm:

  1. Which is more important to you: a better lifestyle or a sense of purpose?
  2. How significant is your preference for more freedom and time or ambition and prominence?
  3. Are you willing to lost everything or risk little?
  4. What will you do to fund your business and satisfy Capital Adequacy or do you prefer minimal cost?
  5. Can you work alone or prefer to be part of something already established?
  6. Are you willing to make sacrifices for the next three to five years to accomplish your goals, or do you demand immediate success?
  7. What does success look like to you; do you want to be shown or do you want to show others?

Answering these questions and establishing purpose removes any illusions (or delusions) about being a self-employed financial adviser.

Carefully consider your answers to these issues, as neither option is easy. There’s no shortcut to creating your own business, and there are different paths you can take, depending on your motivations.

The sad truth is that many multi-adviser firms rarely go beyond about five advisers in total. This low number achieves very little for the founding principal, not even decent profits for the enormous effort. Usually, the principal of the firm will find that time to review his own clients diminishes and instead, he ends up a manager.

At Truly, we’ve had several small DA firms that have closed their doors and joined us as individual RIs, and today they are making more net income than they did as principals, without the stress. To break even against the increased time and costs for a growing multi-adviser firm, you need more like twelve advisers. Further, you need greater than twenty advisers to start making a reasonable profit. It’s tough to make a dent in this industry, so the choice is stark. You either settle for the sole trader lifestyle business, or you cease advising and aim to grow a national IFA.

Setting your structure at the outset is vital since as many have experienced, there is no prize for betwixt and between.

What’s our Approach?

We looked at all available models in 2009 and settled on the idea of:

  • Direct authorisation and supported by our own internal compliance department
  • Multi-adviser firm expanding to 100 self-employed registered individuals, nationally
  • Offering truly independent financial advice, on a sole trader lifestyle model

We committed to maintaining the ethos of providing friendly truly independent financial advice without being adversely governed or influenced by others.

We support sole trader lifestyle choice independent financial adviser (IFA) business that are self-managed by the registered individuals with the aim of sustaining a certain level of income or to provide a basis from which to enjoy a happy lifestyle.

Since RDR, most firms have abandoned the independent advice model for the apparent leaner restricted model. Over time they will most likely lose their clients to either:

  • Independents such as us
  • Direct self-investment models

We have strength, no debts and are very profitable. We know financial advisers will return to more lucrative IFA models that offer more specialist and more lucrative impartial advice. In fact, the greatest reason advisers are moving to us, is one of restricted versus independent models. In contrast, Truly Independent was set up in 2010 with these regulatory changes in mind and hence has no legacy, compliance or economic issues to improve.

We are directly responsible for the advice given by our financial advisers, and that makes us more cautious, which is the right protection for them and is in our best interests. Our compliance department makes all regulatory decisions based on our findings and our own interpretation of the facts.

We are well established, have a strong foundation and strong structure in place to grow and develop.