Nick Heath:
The reality is for most financial planning business owners, they don’t start their business thinking about exit multiples or how big they’re going to grow this thing. Actually, what they’re looking to do is deliver great advice to the people that come through the door. But somewhere along the way, they pick up different roles, they pick up different hats, be it Compliance, be it HR, be it Finance, be it Operations. And often what happens at that point, at that kind of critical inflection point, is business owners begin to think it’s actually a people problem and they start hiring. So it might be that they bring an Operations Director in, they might bring a Compliance Officer in, they may bring somebody in to do HR, and that all feels like a really good idea. But of course, all of that expense is dropping to the bottom line, and it may feel like it’s working for a while, but at some point it falls over.
So what business owners need to think at that point is actually, if it’s not a people problem, is it really just the question of wearing too many hats? And then they need to start thinking differently about what happens next. It’s about understanding what value you add to clients. So what do you do well? What do they see as a benefit? And actually what is better, being handed to a specialist? We call it kind of outsourcing or insourcing for kind of common vernacular. But for me it’s about identifying where the value actually truly lies. And there’s some really kind of good examples of that. Typically, investment management being one, technology and also things like acquisition. Clients really value the kind of investment management piece from a financial planner. And of course it’s really, really important, but actually what they value is understanding their future financial vision.
Can they retire a couple of years earlier? Can they go on that round-the-world trip that they really, really wanted to do? So whilst it’s important, I think the best firms recognise that by outsourcing investment management, they get time back in their business and they can continue to deliver great outcomes for their clients. Yeah, I think the other thing is technology. It’s often seen as the kind of panacea. Certainly over the time I’ve worked in financial services, there’s always a new piece of tech, the shiny new toy, and firms realise that actually by outsourcing it, cost, time, focus, that is a great thing for them to do to allow them to grow and scale more efficiently. Once that kind of penny drops that you don’t have to load bear on all of these hats and take that on, and as soon as you get rid of that, it can give you that kind of clarity of role and vision for the business as you move forward.