Profit is essential for all businesses to thrive and invest and Financial Planners, above everything else, are business people who need to make a profit. Profit is the lifeblood of all Financial Planning firms and that's something that is sometimes forgotten.
I was reminded of this during the week with a report from adviser support firm Dynamic Planner which surveyed advisers and found the minimum threshold for planners seeking to take on new clients has now risen to £168,000 and 4 in 5 planners say they have raised this threshold in the last year.
This is one reason why Financial Planning, certainly in its current guise, will never be a universal service affordable by all. In many ways, it has become even more elitist as the weight of regulation has pushed up costs and made planners look again at the bottom line.
Despite this, the Dynamic Planner survey also found that the average number of clients per adviser has risen 14% in the past year from 118 to 134. Given that we know the number of regulated financial advisers has remained relatively stable over the past few years at around 30,000 this suggest more clients at being served by Financial Planners and perhaps technology has helped make this happen.
The question now is how to reach the masses and there are promising developments. Targeted Support has just been launched with some players already entering the market and Simplified Advice may be on the way.
I can see a new advice ‘eco-system’ emerging where consumers with modest amounts to save and invest get generalised guidance to encourage them to get on the investment ladder and those who build up substantial funds seek a professional Financial Planner.
I suspect this is why most Financial Planners are quite comfortable about the emergence of new forms of guidance - no-one is going to eat their lunch, at least not today.
So we have a situation where many Financial Planners are doing pretty well and the hectic M&A activity we see underlines this. The Financial Planner model with its recurring income is an attractive model for acquirers.
Financial Planners should not turn their backs on lower value consumers, however. Supporting national campaigns and pro bono advice initiatives is a good way to keep in touch with the wider market and, of course, technology makes new forms of guidance easier and more affordable to deliver for those looking for new ventures. Financial Planning also needs more work to spread the word - it's still poorly understood by millions of consumers.
Ultimately, however, most of what is delivered to consumers in the form of advice or guidance needs to be done at a profit. That will always be an overriding principle.
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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and mainstream news. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days. Email:
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