Time to refresh your Financial Advice brand?

I’ve noticed in the last year or two a growing number of Financial Broker firms that are taking a serious look again at their branding. This is great to see, as your brand says so much about you and your business, and is a key factor in a prospect’s decision to become a client or not.

However rebranding is not a task to be undertaken lightly, because your brand is about a lot more than simply your logo and business name. Your brand represents everything about your business; your propositions, your reputation, your service methods and standards, how you communicate with customers and prospective clients and all of the marketing and service material that you use. That’s not to say that all of these need to change when you rebrand. However any change in your branding cannot be at odds with any of these factors.

So why might you think about rebranding?


Your proposition is changing

This is the most common reason I’m seeing for rebranding activities today. Businesses are changing; propositions are shifting from being product / transaction focused to a focus on financial planning and the advice given to clients. As a result we’re seeing firms looking to develop brands more aligned to this new proposition. These businesses generally seek to develop a more sophisticated brand name and logo – ABC Insurance Brokers simply won’t cut the mustard any longer! But it is important to remember that changing your name to ABC Financial Planning / Wealth Management, along with a new modern logo is not enough. Your whole business proposition needs to change too, in order for your new brand to be credible.


You want to change your name

You may not be changing your proposition, but might want to change your name. This could be for a whole host of reasons; to modernise, to better reflect what you do, because of a change of ownership etc. Again the key here is to ensure that any name change is not in any way at odds with your proposition.


You want to smarten up a bit

It happens all the time! Your brand might have been developed many years ago and is simply tired looking. Maybe only a cosmetic change is needed, a “tilt” of your logo, maybe modernising the colours and typeface. This can actually make a significant difference, if developed with thought – it can sub-consciously and quite significantly change the perception of your business.


You want to target specific customers

Now we’re really getting into powerful reasons for rebranding! Your business model might be changing and maybe you are becoming more focused on a specific niche. This niche might be potential customers of a specific occupation or sector of the economy, it might be a particular geographical area or indeed you may be specialising in a specific product area. Again this needs to be thought through carefully. Niches are great, as they enable you to communicate more personally and specifically with your target audience. But they are also exclusionary by their very nature. So you need to be very careful with your branding, recognising that it may appeal to one specific group, at the expense of many other groups. This may be the goal of some firms (where the niche is attractive enough), but don’t rebrand for a particular niche that on it’s own cannot sustain your business.


You want to reinvigorate your business

Rebranding can also help breathe life into a business that gone a bit stale… It can become a “line in the sand” event, where everyone works together on the new brand, rediscovers their pride in the business and the rebranding can become the launchpad for renewed effort.
These are just some of the reasons behind Financial Brokers rebranding their businesses today. Don’t undertake the exercise lightly; it can have a profound impact on your business and the perception of it by your target audiences. Give it the necessary time and energy; you’ll be looking at your new brand for a long time if you get it right. And for this reason too, I strongly urge you to use a brand specialist / graphic designer with lots of experience in this space. Their knowledge and creative powers will add a lot of value to your end result.

Is Trail the right Financial Model for you?

Trail commission. Is it the silver bullet that justifiably allows Financial Brokers to build value in their businesses and eventually sell the business at a healthy multiple? Or is it a somewhat opaque way for advisers to be paid, sometimes with very tenuous links between the value provided by the adviser and the payment received?

Is it the right model for your business?


Trail commission is not perfect

Okay, let’s get the negatives out of the way first… Trail is far from perfect; in fact one could argue that it has some potential conflicts of interest for Financial Brokers. The word potential is highlighted for a reason – trail commission doesn’t in itself cause the conflicts, but the use of trail by individual Financial Brokers could. Let’s look at a few areas of possible conflict for advisers,

1. A client gets a windfall, let’s say an inheritance. If the adviser’s income is based on the amount of assets under management, income increases if the money is invested. If the client pays off their mortgage, it doesn’t.

2. What does the client with €3 million invested through the adviser get that’s different from the client with €500,000 invested? Are bigger clients simply subsidising smaller clients?

3. Similar to the above, a wealthy client gives you €500,000 to invest. You then find out that they have €2 million invested elsewhere themselves. What additional services will they get when giving you the money to manage, that will justify your huge increase in fee? Of course if you are providing comprehensive financial planning, with future cashflow planning sitting at the heart of it, there’s part of your answer – you need visibility of all assets to provide the complete picture.

And then there are the negatives simply in terms of trail commission as a business model. You secure a senior executive in a large company as a client. But after your factfind and analysis you find that the client’s wealth is tied up in a company sponsored pension scheme, also with an AVC scheme on great terms. Unless the client has other investment assets, there’s not much earnings potential for you on a trail basis.

And what happens when markets fall sharply or indeed the client decides that its now time to de-cumulate assets? Your earnings take a drop, even though your work may not.


But there’s a lot to be said for it!

First of all it’s relatively easily explained. Clients understand that a small percentage of their money will be taken as charges. Trail is simply an addition here and clients “get” that.

Then of course trail is very easily collected – this is such an enormously important point! Advisers say all of the time that it’s hard to get a client to write another cheque, especially year after year. Trail makes this problem go away and the adviser / client relationship continues each year without this hurdle.

And clients see a level of alignment of interests too – if the portfolio sees strong growth, both the client and the adviser win, if the portfolio falls in value, they both lose. Is this fair for the adviser? That’s a question for another day!


It’s all about your proposition

To me, this is the nub of it. If an adviser is simply adding trail onto policies as a means of securing ongoing payment without giving too much thought about what they are delivering, I believe this is a very flawed model and a very risky strategy. If an adviser cannot demonstrate and communicate their value, and as a result link the trail back to what they do, they are on very unstable ground.

On the other hand, if your advice proposition is crystal clear, clients understand it and are happy to pay for it, well then trail commission is a very appropriate method of collection of your fee. And were trail commission ever to disappear as a means of collection of fees, clients would be clear about the value you are adding and the fees that still need to be paid.


What would I do myself?

I’m not an adviser so you could argue that it’s easy for me to be a bit sanctimonious on this issue! However I could also argue that trail is not a feature of my business model (which is based entirely on fees) – so I only get paid when I can demonstrate value. When you have to demonstrate value to get paid, trust me you work very hard on your proposition!

At the end of the day if I was an adviser, I think I would use trail commission as a method of payment. But I would link it clearly back to the value that I’m adding, and ensure the client sees the trail commission as simply a method of payment for the advice given. The quantum of trail would be decided by the services provided. I’d give clients choice; fees, retainers, trail etc. Their choice, but they need to be clear that they are paying you for the value of your advice, rather than the setting up of a product. Because it is in the provision of advice where Financial Brokers add value and change clients’ lives for the better.