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The inference is that no matter what market conditions there are, there always going to be those who see their glasses as half full (at the moment empty) and those who simply see opportunity
Changing market conditions are the reasons that clients want to talk to their adviser, but in an adviser business perspective, these are also the best times to make a great leap forward.
In the investment and advisory space, things have been chugging along on a fairly even keel for quite a long time. And then all of a sudden the wheels fell off, with a landslide of finance company collapses, credit crunch and sub prime, and scandal about the likes of Blue Chip and Bridgecorp.
Given the media has now found a new appetite for printing (bad) financial news; it is not unreasonable to expect that the next year or so may prove to be interesting.
Therefore, its time for many advisers to reappraise their position. In my business I get a lot of people giving me their tale of woe. That’s understandable, as many of them are talking to me about selling down part or all of their practices. I am a little surprised not to be getting equally as many people banging on my door, to talk to me about the opportunity to expand their practice through acquisition. So maybe it is time for reflection and a little bit of re-planning to take account of changed markets. We do it all the time for our clients with re-allocating and re-adjusting their portfolios, why don’t you take a chunk of time out for yourself.
So let’s start the process.
1. Are you in or out? Is the current climate such that it has convinced you that it is time to down size or even sell your advisory practice? This will largely depend where you are at in your life cycle as an advisor. It’s a relatively new profession with a very high average age. It’s quite understandable if a number of advisors are finding the going just a bit too tough or are not looking forward to getting up every morning to talk to their clients. Maybe it is time to pass on the baton. A very important and individual decision, a number of people are contemplating that option.
2. More of the same. Stay under the radar, keep on going with my clients, and just hope that the tide will turn and the investment markets and the general profile of advice will improve without any general input from me. Frankly, I think that’s not staying under the radar, its hiding the head under the bed clothes. A number of advisors that I have spoken with are concerned about contacting clients in case they are simply opening the door to problems. Personally, I think that they are a bit gun shy and that a pro-active and a positive approach may reap them may more benefits than they make think. The only thing for certain, if you are not going to talk to your clients, eventually they will talk to somebody else.
3. Seize the moment. Right now it is reasonable to assume that there are two quite separate opportunities in front of you. Firstly, as already briefly discussed, some advisors will be selling down or selling out. Prices are lower than they have been for the last three years, and as in the investment market place, there are good value deals to be done. If you are interested in growing through acquisition, look at the logic. You can spread your costs over a larger customer base, the cost of acquisition is lower than the cost of one on one recruiting of new clients, and lastly you are able to leverage up all of your activities and perhaps bring on board one or two people to assist and act as successors. There are really only a handful of advisors or advisor practices out there that are totally full up and don’t plan to increase. The rest of you are probably still on growth mode, and surely a market place like this is the ideal time to contemplate acquisition.
As we achieve clarity on the compliance front (i.e. when it stops getting turned on its head every couple of years) then the overseas experience has been that a number of advisors will simply choose not to go back to school and either specialise or depart. So you will probably have about 12-18 months to contemplate how you might take advantage of that and expand.
Secondly, there are a lot of clients out there who are a little unsure about whether they want to stick with their current advisor. Either they are not getting enough information, they are disappointed in the results that are being achieved by their portfolio, or they read the financial media and wondering whether they have placed their trust in the right person or firm.
This is a competitive world; if people are unsettled with one advisor then maybe you should be their next advisor. I am not suggested you go and publicly beat your chest on how well you have done for your clients compared to others, that sort of approach has a nasty way of back firing in the future. But you may wish to stand out from the crowd by being a very pro-active and visible commentator, happy to talk to anybody and everybody about how you are dealing with your clients and how they feel about it.
Investment seminars used to be the flavour of the month, all about saying that I have a better idea than the guy next door. Now I think it is more of a case of advisor seminars, how my advisor (maybe you) has done a wonderful job not only through the thick, but also through the thin.
If you re-appraise your business plan, instead of it being all doom and gloom, you may actually see the glint of gold! I suspect that as always in troubled times the cream will rise to the top, and go on to be the nucleus of a different and probably better advisory profession. Others will choose to capitalise on their hard work to date, and exit the business. The main thing is to make a decision. Being wishy washy will probably simply mean joining the possums, squashed smack in the middle of the road.
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