Why Should IFAs Transform

Every practice could look to develop their business model; be that for firms looking to maintain their position, ones looking to expand or ones looking to exit the industry.

Benefits Of IFA Transformation

  • Increase Revenue: Firms with a clear proposition and stable revenue streams will build a highly valuable asset
  • Improved Work/Life Balance: Become more pro-active, rather than re-active
  • Reduced Cost: Through efficiency gains
  • Competitive Service Proposition: An out of date proposition that doesn’t focus on ongoing service could affect income streams in the future (e.g. April 2016 sunset clause on trail commission)
  • Competitor Advantage: Market competition is becoming more intense. Need to justify and demonstrate value to clients to retain your services in a fee charging world
  • Improved Customer Satisfaction: At price that’s right

Implications Of Not Transforming

  • Lose competitive edge
  • Lose clients
  • Lose staff or fail to attract the right recruits
  • Lose or not fully develop key strategic partnerships
  • Lose business identity or lose control of the business
  • Affect the firm’s profit margins
  • Lose opportunities due to being unprepared
  • Hinder M&A requirements or client bank opportunities
  • Hinder future exiting strategies

What The Regulator Wants

Some firms are already feeling the rigour of this new supervisory approach. So what is it that they want?

Culture, governance and control

Do firms have corporate governance structures with enough maturity and forward-looking management information to drive business decisions? Governance arrangements will need to be structured to show how the business organises its affairs and how it’s designed to match culture with operations.

Business model and strategy

The recent change to FCA Threshold Conditions now includes a firm’s business model with the condition stating that the firm’s strategy for doing business must be suitable for its regulated activities. The requirement is to develop a robust business model and strategy that clearly articulates the business proposition, target markets, distribution and how the business will manage its conduct risk.
Strategy sets the direction and priorities of the business and the focus for management. Controls, including management information (MI) are essential to satisfy managers (including senior managers) that the firm is delivering fair outcomes for consumers.


Leadership at all levels sets the tone of an organisation, driving the behaviour of staff and the quality of decisions. Senior management frequently fail to allocate enough time and resources to deliver TCF when they are focused on other business priorities or the delivery of any new business initiatives. TCF should be built into delivery of changes to the business.

Decision making and challenge

Strategies, policies or procedures that deliver unfair consumer outcomes are not always challenged by staff or customers. This is often because there is no formal process in place or the environment was not conducive to challenge by staff or customers.

Performance management

The organisation’s approach to performance management and reward should drive the behaviour of staff and enable management to assess the quality of the performance of an individual.

It’s imperative that the service and advice that advisory firms provide clients is of a high standard, whilst maintaining commercial outcomes for the business owners.

Mergers and Acquisitions – Exiting Firms: Value Enhancers & Threats

Value Enhancers

  • Recurring and sustainable income
  • Clear advice proposition
  • ‘Sticky’ client base
  • Larger case sizes
  • High-quality adviser teams
  • USPs and innovation

Value Threats

  • Owner is seeking immediate exit
  • Owner looking to retain key client relationships
  • Over-reliance on a small number of clients
  • Low quality client records
  • Poor compliance and/or regulatory concerns

Transformation Options

How do you go about transformation? Where do you start and what are you options?


A full time operations role will require a salary, company benefits, employee rights etc.

The other question is:

Does operational support need to be full time?

Throughout the life cycle of a firm there will be times when operations and business strategy become the focus, after which delivery and monitoring will become centre stage.

Do It Yourself – Most of the industry is made up of smaller practices and the majority of the owners/partners are still advising clients, and most wish to carry on advising. If business owners decide to project manage transformation strategies, you’re being taken away from your core activities i.e. advising clients and supervising staff, thereby affecting the firm’s efficiency and profitability.

Therefore, it may be prudent to outsource!


Areas to consider:

Who do you outsource to? – There are a variety of specialist advisers available.

Which specialist do you use first? – Their advice may tend to be biased towards their expertise and may not consider other risks or priority areas within your business.

What if you need more than one? – Each specialist will require a detailed overview of your business. This causes some obvious issues:

  • Cost of their time
  • Cost of your time providing a repetitive fact-finding exercise

You then have to spend time digesting their advice and assessing what is the priority, the resources required to implement etc. Also, you have to work out who is going to implement it and how they are going to do it.

Support structure – What if you become too reliant? Consultancy services with only one or two advisers may be stretched and not available if your firm needs them.