Take your business to the next step

By Jeremy Spira, Head of Technical Marketing at VitalityInvest

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Aug 29, 2019
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Overcome the challenges to growing your business

The last five years have seen financial advisers dealing with a host of challenges ranging from increased regulation, pressure on fee structures and evolving client needs, together with an investment industry preoccupied with replatforming issues and volatile markets. The rise of robo-advice, D2C platforms and digital banking solutions have also provided individuals with alternative methods of managing their wealth. 

Due to these collective pressures, it comes as no surprise that many advisers accept offers from consolidators. Whilst this may seem appealing to some, especially with the latest figures from The Heath Report1 indicating that one in five advisers are set to exit the industry in the next five years, it is important to remember that whether advisers are looking to grow their business for the foreseeable future or preparing their succession plan, showing a meaningful profit is still vital today. 

Growing an adviser business profitably, and overcoming these challenges starts with the heart of the business – the client base. Advisers will need to attract new target markets and retain existing clients. 

Reaching new target markets 

Today, advisers are faced with a client base where 56% of clients are already old enough to qualify for pensions freedoms2. Focusing on this ageing client base however, whilst profitable for the adviser, can present as a double-edged sword. 

With the huge wealth transfer that is on its way, advisers should look internally to their clients’ beneficiaries to ensure that this wealth remains. This involves tailoring the advice process to cater to the needs of the next generation. Recent studies however, suggest advisers only engage with 20% of beneficiaries3 meaning that a large proportion of assets are at risk of leaving adviser firms within the next 30 years. 

Attracting new clients to the adviser firm can also pose difficulties. Firstly, some marketing strategies such as reliance on word of mouth and Unbiased prove impractical when conversion rates are so variable - between 10 to 45%4. Secondly, new clients place strain on profitability, particularly if their assets are small in relation to existing clients. 

Overcoming this problem requires higher conversion rates. These could be increased by partnering with a provider whose product features appeal to a wider client base, and focus on overall lifestyle rather than financial strategy alone. Unique product features will then help to broaden the appeal of financial planning to more and lead to the investment of more assets. 

Retaining existing clients 

The “Stay or Stray” report by Pricemetrix5 highlights the advisers’ struggle to retain clients. Between years one to three, clients are a high flight risk with the client/adviser relationship only solidifying after five years. This means it is critical for advisers to demonstrate value to clients in the early years. 

The cornerstone to value is being able to justify fees whether they are from the product, fund or adviser. This subject has come under immense scrutiny in recent years due to increased regulation. CoreData’s most recent survey6 shows that compliance with the Markets in Financial Instruments Directive reporting standards (MIFID II) is the biggest concern for advisers this year, even ahead of Brexit or broader economic volatility. 

Ensuring that advisers are implementing their centralised investment or retirement proposition in the most cost-effective way can be a solution to reduce fee pressure and retain clients. They can do this by considering relative provider value. Product features which reward customers for positive savings or lifestyle behaviour can increase long term value and so encourage clients to remain invested for longer. Such features could also foster engagement with the financial adviser helping further to retain clients. 

Grow your business with VitalityInvest 

At VitalityInvest, we take a positively different approach to investments. We are the only provider to bring together wellness and savings. Our products incentivise people to save sooner, invest for longer and take steps to look after their health. When clients save for longer, we’ll boost their savings; when they look after their health, we’ll charge them less to invest. 

Our unique proposition appeals across generations, allowing advisers to reach out to a wider audience and to more effectively retain business from inter-generational planning and wealth transfer. By integrating our healthy living programme and rewards into all our plans, we increase client engagement, encouraging them to maintain their relationship with advisers for longer. In addition, our Boosters and Discounts help clients' investments grow more. This allows advisers to show value to their clients and maximise the value of assets under advice at the same time.  

Through VitalityInvest, advisers can reach new target markets and retain existing clients, allowing both to enjoy a healthier, more financially secure future. 

For more information please contact your Vitality Business Consultant or visit our website.


Sources
1. The Heath Report – Gary Heath, January 2019 
2. Aegon adviser attitudes report 2017 – A spotlight on advisers’ clients, November 2017
3. Octopus investments, January 2019 
4. The Yardstick Agency, 8th November 2018 
5. Pricemetrix Stay or Stray report, December 2013
6. CoreData, July 2019

VitalityInvest is a trading name of Vitality Corporate Services Limited. Vitality Corporate Services Limited is authorised and regulated by the Financial Conduct Authority.
22/08/2019 | This article’s view is based on the law, practices and conditions as at the day of publication. While we have made every effort to ensure they are accurate, we accept no responsibility for our interpretation or any future changes. | VI NL 0007

Go to the profile of Vitality

Vitality

We’re the first insurance company to reward people for healthy living. We aim to be the best at what we do, offering comprehensive and award-winning Health and Life cover and positively different investments to our members. We believe in the idea of ‘shared value’: we help you take a more active role in managing your own wellness, which can encourage you to develop healthy long-term habits that are good for you, good for us and good for society.

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