What services will you outsource in 2024?

As we come towards the end of another year, the minds of many financial advisers are taken up with reflecting on the year just gone and planning for the year. The good news is that the reflections are generally positive, with most firms reporting a strong year behind them, with growth in turnover, assets and hopefully profit too. They generally have been successful in attracting new clients and retaining existing clients. The aim is for more of the same in 2024.

The key challenges that advisers speak to me about are on the operational side of their business. With the growth of their business, comes greater demands on the resources of it. And the primary and most valuable resources – people – are very thin on the ground. Firms are finding it extremely difficult to hire the calibre of people they are seeking. Overlaid on top of this are an ever-increasing compliance burden, technology changing at breakneck speed particularly in the AI space and increasing complexity in managing all the parts of the business.

Help is needed before the business starts to buckle under the strain, and for many firms the answer may lie in outsourcing.


What is outsourcing

The Financial Conduct Authority (FCA) in the UK defines outsourcing as a business involved in an arrangement where a service provider performs a process, service or activity on behalf of a company that the company would otherwise carry out itself.

It is simply the use of third parties to carry out some functions on behalf of the firm. It’s done mainly to reduce the need to involve the in-house team, reduce cost, bring specialist expertise and to ensure some critical core functions are properly delivered.


What services are outsourced by financial advice firms?

With the exception of the core service of providing advice, pretty much every other function is capable of being outsourced. Financial brokers and planners retain the critical responsibility of the provision of financial advice – after all, this is what the clients want from you. Typically, the basic administration services remain in-house too. These ensure that the client relationship quite rightly remains with the core team within the business, who continue to provide the advice and service that the client values most.

But pretty much every other function is secondary, at least in the client’s eyes, and can be outsourced if this makes sense. For example, if the team are already flat out with delivering quality advice and service, there may be no more capacity to look after these additional functions. Common functions that are outsourced include,

  • IT: Most advice firms don’t have an in-house IT resource but utilise an external service provider for IT and data security services, network management and staying attuned to technology advances.
  • Paraplanning: With the growth of financial planning as a core service and the increased depth and complexity of financial plans being delivered, an increasing number of advice firms are now using 3rd party paraplanning services to develop their financial plans. The relationship and delivery of the plan remains with the adviser, with the paraplanner working in the background on the development of the plan.
  • Marketing: Most firms don’t have an in-house marketing expert and after spending time and money (each of which is in short supply) on campaigns that didn’t meet expectations or on trying to deliver regular communications to clients, they recognise the value in utilising third party expertise.
  • Compliance: While retaining all regulatory obligations, many firms now utilise external compliance resources to ensure they stay up to date with their existing responsibilities while also being kept informed of all new requirements. This is one area that firms cannot afford to get wrong.

And then there’s the rest… Examples include external HR consultants to help them recruit and develop professional HR standards and external trainers to help develop the skills within the team.


The benefits of outsourcing

These are numerous. The primary benefit is in enabling the core in-house team to focus on where they add the most value – delivering to clients. Equally important is the access that is gained to specialists, as opposed to muddling through tasks yourselves that you may not have the skills for.

Operational efficiency should also ensue as the third party providers specialise in these areas and should be able to complete the tasks quicker, at lower cost and to a higher standard. They also will ensure that your firm is leveraging the most advanced technologies that otherwise you might be unaware of.


What are the steps to outsourcing?

The place to start is within your own business, considering your operational effectiveness. What are the tasks that you should be doing, that you’re just not getting to? Once you consider this, then you can start thinking about external partners.

The key then is to identify a partner who will meet your exact needs. Speak to other financial brokers, check out industry publications or speak to the likes of Brokers Ireland who may be aware of providers of the services you are seeking. Where possible, seek partners who have a deep knowledge of the world of financial brokers so that you don’t have to spend your time educating them! After identifying a potential provider, outline what you need and seek a proposal from them. Check their references and closely examine their costs to ensure you will gain enough value from their services. Would you be better off hiring another person instead?

Consider the risks – could a third-party underdeliver and end up damaging your brand? Even worse, could their services land you on the wrong side of some of your regulatory obligations? Or could they simply underperform and be a waste of money? Challenge the 3rd party and again, seek testimonials from similar firms to your own.

And then review their performance regularly. Are you gaining the benefits you expected and does outsourcing remain the right approach for you?


Maybe 2024 is the year that you will build some excellent outsourcing relationships to enable you to maximise the potential of your business.

It’s time to plan for greater numbers of female clients

As an important element of the research completed for Brokers Ireland on “The Evolution of the Broker Market 2030”, we identified 12 areas to be considered by Financial Brokers to help prepare your business for the changing market environment.


We have considered previously the importance of developing the best proposition and services for different groups of clients and prospects. We now consider the next action identified in the research, which focuses on planning for greater numbers of female clients in the future.


According to research by the Royal Bank of Canada, women will manage two-thirds of household wealth by 2030 and increase their share of global wealth from about half to 70% within two generations.[1] While women have taken significant strides in the workforce over the last two generations, much of the fortunes of men who pass away will also end up in the control of female spouses, who tend to be younger and live longer.


In Ireland, there are more women than men, with the ratio of men to women now at its lowest level since 1871.[2] There are also more women in the workplace today, and so demand for financial advice should increase from them.


More generally, it is important that couples are advised on a very collaborative basis, with the full involvement of both partners. The days of just dealing with the main breadwinner are long gone. Both voices must be heard in conversations about household finances and wealth, to engage and leverage the unique perspectives and insights of both partners.


Some of the specific challenges faced by women when it comes to financial advice also need to be considered. For reasons such as past inequality in the workforce and women taking breaks in their careers to raise their families, women typically have smaller asset pots than men today. In Ireland, a gender gap in pension income – the percentage by which women’s average pension income is lower than that for men’s – of 35% exists today.[3] The advice and solutions offered by Financial Brokers will play an important role in helping to close this gap.


So when it comes to planning to attract greater numbers of female clients, the starting point might be to review your marketing presence to ensure it is appealing to both male and female clients. Carefully review the imagery and text on your website and social media profiles to ensure it is appropriate and appealing to all.


The next step is to consider your own advice approach and proposition, and how well it is positioned for both male and female clients. Are you talking to your clients in an unconsciously male oriented way? Are you really tapping into the specific challenges that women are facing and building these in as a core part of your proposition and your messages? Of course as part of this, it is crucial that you have firmly communicated the importance of having both partners in a relationship at the meeting, to ensure that both voices and their unique perspectives are equally heard.


Finally there is real value in reviewing your client base, with a view to identifying the gender gap in household incomes. This opens up the opportunity for you to build solutions for this gap as part of your advice recommendations, adding value to both the couple themselves and for your business.


The bottom line is though, when you think of your target market you typically look for ways to meet the needs of the largest segment within it. Focusing on females is a sensible place to start.


Have the right cost model in place

As an important element of the research completed for Brokers Ireland on “The Evolution of the Broker Market 2030”, we identified 12 areas to be considered by Financial Brokers to help prepare your business for the changing market environment.

We have considered previously the importance of developing the best proposition and services for different groups of clients and prospects. We now consider the next action identified in the research, which focuses on developing a cost model that makes sense for both the client and also for your Financial Broker business.

This starts with recognising that being a Financial Broker is a very worthy profession that delivers a lot of value to clients. Good Financial Brokers deserve to be well rewarded for the value that they add, helping clients to achieve their financial objectives and transforming their lives.

To achieve this, a well-thought-out remuneration model that is linked closely to the value added must be developed and articulated clearly to clients. This may appear difficult to some, who have simply been ‘price takers’ in the past.

While there is a sense that fixed fees may be charged for project-type work such as some complex planning services, there is a strong and unanimous belief among all Irish participants in this research project that the current commission model, particularly in relation to ongoing charging on an assets under management (AUM) basis, works efficiently and will continue.

With regard to explaining the level of charging, Brokers will need to be able to clearly demonstrate and confidently articulate the value delivered. In the future, it would be prudent to anticipate that trail commission won’t continue without value actually being delivered.

There is an expectation in some quarters that enterprise level charging structures (irrespective of where business is placed) will emerge. In this case, Financial Brokers will need to set their own pricing for different products, and not vary this based on terms given by different providers. Additional benefits supplied by a provider would then go to the client.

Charging for younger clients and those of limited asset amounts is recognised as a real challenge for the industry. They are not attractive to either providers or Brokers today, but they are the valuable customers of the future. The belief is that many Financial Brokers will take a long-term view that as these people’s careers progress and their assets build, in time they will become attractive clients. For clients with low assets, Brokers will need to continue to receive initial remuneration to make this business worthwhile, either by commission or through the levying of some form of an administration fee. As discussed earlier, the service level provided to these clients will need to be relatively light, in line with the income generated for the Financial Broker.

So, what are the steps for you to take to develop a cost model that will serve you well into the future?

The starting point is to review your current remuneration levels across your different client segments, ensuring that they are fair and equitable to your different groups of clients, and to you. Your next action is to take a step back and identify all the areas of value that you deliver, and then place a cost on these based on your time, expertise and the value experienced. This may require you to adjust your remuneration amounts accordingly.

Running in parallel with these actions, we also think it prudent to actively consider an alternative remuneration approach for younger / lower value clients, to ensure that they are not loss-making for you, while also delivering positive outcomes for the clients. Your cost model needs to be proportionate and attractive enough for these clients, while also making sense for your business.

Finally as you look forward out over the 8-10 years and should enterprise level charging begin to emerge in the future, it might be worth considering the levels of charge that you would apply to remove any suggestion of provider bias in your recommendations.

Fees and charges are always a tricky area to get right. The solutions you develop must be transparent and fair to your clients, while also providing the level of income required by your business to ensure you can afford to continue to deliver a world class service to your clients.


Know your target market

As an important element of the research completed for Brokers Ireland on “The Evolution of the Broker Market 2030”, we identified 12 areas to be considered by Financial Brokers to help prepare your business for the changing market environment.

We now consider the first action identified, which is the importance of identifying and getting to know deeply your target market.

Based on the research findings and the numerous challenges faced in providing a viable and valued advice service to people of modest financial means, it is likely over the next decade that Financial Brokers will continue to mainly target the mass affluent and high net worth sections of society. Within this, individual Financial Brokers will target different segments of the market, based largely on their areas of expertise or where they can access clients easily. This is who they will target, and the positioning of their business will need to be centred around the target market. Connecting with their target group will be a primary goal and activity of the business.

Financial Brokers should consider where they can add most value. Will this be with families, assisting them in managing every aspect of a household’s finances and assisting them in achieving all their financial objectives in life? Or will their target market be business owners maybe in a specific geographic region, where the Financial Broker will be the guiding hand in all areas of wealth extraction, succession planning and achieving a successful business exit? Or will the Broker build a superior knowledge and understanding of the unique features and attributes of a particular profession and advise them – maybe sports people, entertainment professionals or people in a particular industry? Building a superior knowledge and understanding of a specific target market is a powerful positioning and will enable a Financial Broker to become the ‘go to’ person among that cohort of potential clients.

The value experienced by clients will be in the Financial Broker’s superior knowledge of a target market, the quality of advice delivered, and the products arranged to implement the advice.

That is not to say that Financial Brokers will only have clients within a narrow target market. Other clients will emerge that the Financial Broker did not actively target – some may also be high value clients, however others will be less valuable, maybe having been introduced to the business as a child of a high value client or a referred client etc. However, the marketing efforts of the business will be aimed at the desired target market – these are the people you are putting all your efforts into appealing to.

We identified a number of specific action points for Financial Brokers to carry out.

First of all, it is important to consider your available markets and the ones that offer the scale and best opportunity for you to add value and ultimately succeed. To do this, you need to build a view of the estimated population (households, businesses etc.) within your target market – there are many research resources available to help you do this. These include the CSO, government websites, local business sites etc.

Once this is completed you then decide which group(s) you will target. This will be decided based upon having confidence that the target market is viable and big enough to sustain your own business goals and ambitions, and being able to identify clear access points to this market. You need to have a good sense from the outset as to how you will reach your market.

The third point is often the one that is skipped lightly over – at a great eventual cost. It is very important to develop a deep and superior knowledge and understanding of the attributes and specific financial challenges of your target market. You need to know this market better than anyone –  the characteristics of the people, their own specific challenges, what are the concerns that keep them awake at night and what are the particular financial challenges that they face. The more you understand their own dynamics, the better you will be at empathising with them and delivering advice that is based on knowledge and expert insights. This will be truly valued advice and will enable you to stand apart from every other adviser trying to build relationships with them.

Once you have built this deep knowledge, the final step is to use it to stand apart from your competition. You do this by refining all your marketing channels and efforts to build your presence among this target market. Don’t try and talk to everyone, look to talk in a deeper way with your target market.

Rather than trying to be “all things to all people”, the first step in being a successful Financial Broker in 2030 is to identify and go after a clear target market.



What will the Financial Broker market look like in 2030?

Last month I introduced a research project that I was fortunate to deliver for Brokers Ireland with the aim of developing a future-facing view of what the Financial Broker sector will look like in 2030. The primary purpose of the research was to inform Brokers Ireland as to how they can shape their own objectives and optimise their support services to best meet the needs of their members, and to consolidate and grow their positioning as the leading representative body for Financial Brokers in Ireland, and indeed as the voice of the sector.

In last month’s article we looked at the market today. Now we’re going to take a leap into the future and examine some of the key themes that the research revealed as to how the market will look in 2030.

The general outlook

Overall, the future demand for financial advice is expected to grow, with the future for Financial Brokers looking bright. This positive outlook is shared by Financial Brokers themselves. In a survey carried out in 2022, almost 50% of them agreed with the statement ‘The future is very bright for Brokers, I expect the market share of Brokers to increase’, with only one in five answering negatively to it.[1] Brokers currently enjoy a market share of approximately 74% and there is every expectation that this share will remain stable in the coming years.

This positive outlook in relation to the demand for advice and to the independent advice sector is shared across all global markets. As consumers make transitions throughout their lives and indeed as regulation, products and the financial backdrop within individual markets change, there is a need for expert independent advice to optimise consumer outcomes.

The biggest cloud on the horizon for Financial Brokers may come from the broader economic environment, with the outlook looking quite gloomy today. However, time and time again Brokers have demonstrated their resilience in dealing with negative external forces. The political landscape in Ireland could also experience significant change over the next decade, with some consequences for the sector.

Preventing an advice gap

The greatest challenge in relation to the demand for advice is reaching people who have never interacted with a Financial Broker and are unaware of the benefits this can bring. This challenge is one that exists in every corner of the world. As an example, it is estimated that 83% of the population of the USA have no adviser. Since the Retail Distribution Review (RDR) was introduced in the UK a decade ago, one of the major impacts has been the narrowing of the financially advised population. Similar trends have been experienced in other markets, as consumers are unaware of the value of advice and advisers cannot deliver advice in a profitable way to consumers with more limited financial resources. This has to be one of the biggest challenges for both Financial Brokers and regulators in Ireland – preventing an advice gap widening in Ireland.

In building relationships with new consumers of financial advice, the challenges of engaging the younger generations and engaging a more diverse audience were noted. These themes will be examined in more detail in future articles.

The target markets of the future

While there will be some exceptions of successful, scaled businesses with large client service machines enabling them to reach a wide group of clients, the expectation is that the Financial Broker of the future will work predominately (but not solely) in the mass affluent and high net worth segments.

The sense of most people, and lessons from other markets, is that the successful Financial Brokers of the future will be ones with deeper propositions, offered to narrower target markets – their goal will be to look after all the needs of some people. Being expert with such groups enables an advice firm to stand apart from their peers and be the ‘go to’ expert in that market. The likelihood is that Financial Brokers will seek to differentiate themselves from their peers through deeper knowledge of specific client groups or by demonstrating superior expertise in specific product areas.

The importance of every Financial Broker having their own business proposition that is then rolled out to their customers was a recurring theme. The future of successful Financial Brokers is unlikely to be as ‘product takers’, with their proposition simply being an additional advice layer to the product offerings of their favoured product provider. The expectation is that technology will play a far greater role in the delivery of advice by Financial Brokers. Again, these themes will be examined in more detail in future articles.

The 3 big questions

Over the next editions of newsletters, I’m going to examine each of the 12 ways that were identified as enabling Financial Brokers to prepare for 2030. Each of these will help you to answer the three most important questions for your business,

  • Who your clients of the future will be
  • What services you will offer
  • How you will deliver these services

[1] Brokers Ireland Financial Broker Survey Report 2022

The Financial Broker market in Ireland today

We were delighted to be asked by Brokers Ireland in 2022 to complete an extensive research project to develop a future-facing view of what the Financial Broker sector will look like in 2030. The primary purpose of the research was to inform Brokers Ireland as to how they can shape their objectives and support services to consolidate and grow their positioning as the leading representative body for Financial Brokers in Ireland, and indeed as the voice of the sector.

A secondary piece of work was also commissioned to extract the key learnings from this report, with a view to helping Financial Brokers prepare your own businesses for the future.

The research methodologies included focus groups with Financial Brokers, interviews with senior executives from product providers, interviews with other service suppliers to the sector and interviews with experts from five developed markets outside of Ireland – namely the UK, USA, South Africa, Australia and Canada. This was further supplemented by structured consumer research and online survey research carried out with Financial Brokers. Extensive desk research was also carried out to build out a comprehensive view.

Over the course of the next year or so, we will share the key findings from this research, beginning below with a piece about the advice market as we see it today.


A market in rude health

Financial Brokers in Ireland are the dominant distribution channel and source of financial advice and personal financial products for consumers in Ireland. When investment-only business is excluded, the channel currently commands an estimated market share of 74%. This is a significant increase on the Financial Broker market share that had fallen to 54% before the financial crash in 2008. Financial Brokers have demonstrated your resilience and value to consumers over the last 15 years.

The overall personal finance market in which Financial Brokers enjoy a commanding position has been very buoyant in recent years. The market experienced growth overall of 23% in 2021, which continued with further growth of 23% in the first half of 2022.


The changing role of the Financial Broker in Ireland

While the core role of Financial Brokers as the primary source of expert and independent financial advice in Ireland continues, several factors have fundamentally changed the business models for many of you. These changes have been largely positive and have enabled you to grow more sustainable and valuable businesses. They include:

  • The growth of trail commission as a mainstay of the remuneration model of Financial Brokers.
  • The negative deposit rates (that are currently inching upwards again), offering good opportunities to Financial Brokers to offer better saving and investment alternatives.
  • The growth of financial planning as part of a deeper service proposition.
  • The impacts of COVID, which resulted in Brokers embracing process improvements in the shape of remote meetings with clients, the use of digital signatures etc.
  • The upskilling of Financial Brokers in the form of professional education qualifications and the use of technology in areas such as future cash flow planning.

The general opinion among interviewees is that Financial Brokers simply have a better value proposition than other channels such as banks, direct sales forces and online providers. Your personal touch, your independence and your comprehensive offerings enable you to stand apart. The resilience and adaptability of Financial Brokers was also remarked upon on numerous occasions by interviewees. A recurring theme was that the future of Financial Brokers constantly seems to be threatened by some external force, but you continue to manage hurdles in your path, survive threats that you face, and ultimately thrive.


The Financial Broker market globally today

Generally, across the world, the independent financial adviser markets are in rude health. Several common themes emerged in relation to those markets today.

  • Reaching the non-advised community is the biggest challenge facing the sector globally.
  • There is an ongoing drive for increased proficiency and upskilling globally within the profession.
  • The older age profile of advisers and the challenge of bringing in new blood is an ongoing concern in all markets.
  • The enormous and disproportionate burden of regulations and compliance requirements that are faced by often “micro-businesses” is a significant issue for the sector.
  • All markets are experiencing an ongoing drive for increased transparency for the benefit of consumers.

Next month, we will set out a summary about the expected evolution of the market over the next 7-10 years. Following that, in each of our subsequent newsletters, we will share one of twelve action areas for Financial Brokers to prepare your own businesses for 2030. These action areas are also contained in an information guide that Brokers Ireland have produced for Financial Brokers.

We hope you find this research interesting and thought-provoking.