5 ways to increase your income in 2020

A new year, a new decade. Most advisers are pretty much flat out, looking after your clients and building a better and more durable business. Growing your business remains front and centre for most of you, so here are five high-level areas that can help you achieve your growth goals. While some of the thoughts are not new, hopefully this piece will act as a reminder of areas that you just should never ignore.


1. Attract more customers

This is of course the most obvious way to grow, but often the most difficult as it is influenced by many moving parts; your own activity levels, the quality of your advice proposition and the number of referrals you get from satisfied customers, the consistency and quality of your ongoing client engagement processes, your networking and other client acquisition methods and all of your marketing activities. Having a loyal band of potential introducers (accountants etc.) is a crucial client acquisition element for many successful advisers.

Getting more customers is usually the sum of many activities. If I was pushed and had to pick one that we all can be guilty of not doing enough of? That would be to get out of your office and meet more people. Spending more face-to-face time with prospects and potential clients almost always results in greater numbers of new customers.


2. Review your proposition

Getting more customers is great. However this also creates new challenges in terms of minding these customers into the future. What if you could earn more ongoing income without increasing your customer numbers?

This is where your proposition comes in. There is huge benefit in regularly and critically evaluating your advice proposition. Is it strong enough? Are there more valuable services that you could offer, which would allow you charge more? Or are you delivering the right services to your customers, but they are simply not aware of them as a result of poor communication by you? If you can improve your proposition and your clients’ knowledge and engagement with it, can you charge more and comfortably justify doing so?

I suggest you take some time out to review your proposition and how you are communicating it. You may be pleasantly surprised when you actually visualise the depth of services that you offer and the value that you are adding.


3. Attract more assets

Financial advisers often tell me of the frustrating situation in which they are only managing a portion of a client’s assets. I just don’t really get this one to be honest… Yes I can understand that a client may think they are better off having a few advisers and not having all of their eggs in one basket. However, isn’t it the adviser’s job to manage the diversification challenge on behalf of the client?

This situation sometimes arises as a result of an adviser being happy to simply get a new client on board, even when they are only getting a portion of the client’s overall assets. But how can you advise the client properly when you are only partially informed? Surely this situation will result in a completely misaligned portfolio? And if you carry out future cashflow planning, this is rendered pretty meaningless if you don’t have full visibility. Even if you don’t manage the assets, you need full information about them.

Work on your script with clients where you know or suspect you are only advising on a portion of their assets. Your client needs to be crystal clear about the disadvantages of you not having full visibility of all assets.


4. Cross-selling opportunities are important for you and your clients

Sometimes it’s easier for an adviser to position himself or herself as an investment specialist or a retirement practitioner. But then sometimes as a result, the adviser can be reluctant to step outside of his or her specialist knowledge zone and advise in other important areas such as protection etc.

Yes of course you need to be confident in your capability to provide excellent advice in these other areas, but this is not really a stretch for many advisers. And it does not undermine your positioning as an expert in your main area of specialisation. Clients should expect and will be grateful that you are watching their back in these other critically important areas too.


5. Increase your rates

When did you last actually review your advice rates? I see enormous disparity between rates charged (particularly ongoing trail) by different advisers, often when there is little or no difference in their propositions.

Sometimes it’s a case of one adviser having set their rates ten years ago when the country was on it’s knees and not having revised these rates since then, while the other adviser set their rates in recent years when the economy was on a steady growth path. So is it time for you to look again at those rates you are charging – are you selling yourself short for the value that you’re delivering? This starts back though with your proposition – is this good enough to justify higher levels of trail?


These are just a few ways in which you can look to increase your income in 2020. The next step is to do some more detailed planning around each of them. The very best of luck.

Dealing with dementia in clients

We hear and read a lot of commentary about the challenges that Ireland’s ageing population is posing to the state old-age pension scheme and indeed to pension policymakers. The statistics are indeed quite frightening as we see the scale of the growing population of elderly people being dependent on a smaller workforce. There was a shade under 630,000 people aged over 65 in Ireland in 2016. This is estimated to increase to 1.6million people over 65 in Ireland in 2051.

With this increase in ageing, there is likely to be a corresponding increase in people with dementia. According to Irishhealth.com, an estimated 55,000 people are currently living with dementia in Ireland, the most common form of which is Alzheimer’s disease. This number is expected to more than double to 113,000 by 2036. I’m one of the half a million people in Ireland who have had a family member with dementia, yet despite this widespread experience, research tells us that only one in four of us is confident that we understand dementia.

To look after your clients properly, you need to understand dementia.

Physical ailments don’t impact your client’s ability to make sound decisions about their finances. Dementia does impact this ability, with symptoms that can include memory loss, confusion, difficulties communicating and behaviour change.

These symptoms and the ensuing impacts of a loss of control, vulnerability and worry both for the person with dementia and their family / carers, require very careful and skilled attention from financial planners. Dementia requires a very well-structured, clear and empathetic approach.

When a client suffers from dementia, the financial planner is a critically important contributor in the life of the person him/herself and their family. You play a really important role as money is often a major concern for everyone – they want to ensure there is enough money to provide the best care possible for all of the sufferer’s life. Family members also want to ensure that the vulnerability of the sufferer is not exploited by anyone – having an impartial planner acting in the best interests of the sufferer provides a lot of comfort here.


It’s never too early to find out

Dealing with dementia starts with education of your client. Every client should know that if they or their spouse are ever worried that they are slipping mentally, or indeed receive a diagnosis of dementia, one of their first phone calls should be to you. Giving you an early awareness of this future change in their life enables you to help them plan effectively for it.


There are early steps to take

Your role will be very gentle and in the background before your client’s mental capacity really begins to diminish. However you can help them enormously at this stage, by helping them with some good financial practices. One of the first advices that you can give them is to immediately put an Enduring Power of Attorney in place, to allow a trusted relative manage their affairs when their mental capacity necessitates it.  This doesn’t “hand over control” today, just when needed in the future. Of course you can play a valuable role with your client by providing them with a 2nd opinion if requested in relation to their choice of attorney. It can be very useful for you to be introduced to the appointed attorney too. After all, both of you have been chosen by your client to help them manage their financial affairs as effectively as possible.

Also you can guide your client in relation to bank accounts, making sure that if they were to quickly lose their capacity, that their money would be accessible. This may be as simple as ensuring spouses have access to each other’s bank accounts. Relatively straightforward actions such as these will save a lot of stress and challenge down the road.


Become part of the client’s team

While you will have no role in the actual physical care of your client, in your role as their financial planner you should be watching their back at every turn. This includes working collaboratively with others in their interests, of course with your client’s permission. Seek introductions to their solicitor, accountant and tax adviser. While each of you retains full responsibility for your own areas of expertise, it is useful if the client starts “slipping” mentally for everyone on the client’s team to be aware of this. Early warning can be useful in the early stages of dementia, when some subtle changes and symptoms can be easily dismissed and potentially poor decisions made.


Be active with the sufferer’s spouse / family

People caring for dementia sufferers are usually entering a whole new world too. They’re dealing with unfamiliar challenges and a very uncertain future in unchartered waters for them. They are facing a lot of big decisions that they don’t feel particularly well-equipped to make. While a lot of these decisions are about care, many of them have financial angles or implications too. You can play a very important role in helping clients navigate these decisions.


Clients with dementia and their families need you. Are you ready to step up to the plate and help them?


Money always moves when life is in transition

Credit to Stephen Browne, Voyant

At the Power of Financial Planning conference in the UK last year, Mitch Anthony said, “Money always moves when life is in transition”. This quote really hit home as a central theme of the life changing impact that you can have as a financial planner, and how you are so powerfully positioned in comparison to other professionals who are employed by your clients.


All our lives go through a series of “transitions”

While of course we can trace life events (or instead call them transitions) right back to birth, for the sake of financial planning we can start with transitioning from being a student to working. Transitions are those significant life events that cause a relatively significant change in your life. Each of these changes will have a fundamental impact on your client’s financial situation and include the likes of,

  • A new job: Usually this will result in an income increase (hopefully!) and probably a change in benefits.
  • Marriage: A very significant financial change where your client and their better half marry their fortunes together. Also now their financial goals and needs substantially change.
  • Moving House: A new home usually results in new debt and changed regular expenditure.
  • Children: Apart from the obvious immediate costs, your client’s thoughts will soon turn to increased living costs and future education costs etc.
  • Retirement: A significant financial event as the income tap turns off and it’s time to live off savings.
  • Death: This could be your client’s death or the death of their spouse or parent. Each of these events will have a significant financial impact.
  • Other events: And then there lots of other possible events – buying a holiday home, a significant gift for children, the world tour, winning the lotto or maybe a divorce! Whatever it might be, there will be a significant financial impact.

The point to remember is that every time there’s an event, money moves. Think about it. The question is, will you be the one assisting its transition?


Transitions deepen relationships and create opportunities

The good news for planners using cashflow planning software such as Voyant is that you are the key professional relationship for your clients before, at and after each of these transitions. That is because you are the person managing the client’s timeline, preparing for each of these life events and then helping them at the time of transition. No other professional enjoys this trusted position. Your client’s solicitor is consulted when the event is looming and they need legal advice. The same applies to the client’s accountant – their expertise is sought as the event draws near.

However using cashflow planning, the financial planner is the one that is helping to plan for these transitions. You are the one helping your clients to envision their future life, what they want and how they want their life to plan out. You are capturing all of these goals, desires and events in their timeline. You then help them draw up a financial battle plan to empower them to life the life they want. So, when they actually come to that major life event, their financial situation is an enabler rather than a problem. You are the person that is helping them develop a clear financial strategy for their life, giving them clarity and confidence to live a life free from financial anxiety.

Isn’t it funny that while products will be needed as a result of many of these events, these are simply vehicles to drive the plan. The value that you have provided is helping your client to live their life, to move their money wisely in preparation for and during each of the transitions throughout their lives. Is it the product that your clients will be thankful for or the realisation of the life they always wanted to live? I think you know the answer to that one… The added benefit is that you will also be plotting future business for yourself as your client plans for each of their life transitions. As the financial life planner, it’ll be you who will be there when the money moves.

What impact would 0% asset management fees have for advisers?

Are we seriously talking about 0% asset management fees? Well maybe not yet in Ireland, but Fidelity recently announced the introduction of two core equity index mutual funds covering the U.S. and international markets without any management fee.

If we saw a similar development in Ireland, what would it mean for financial advisers? And even if we don’t, what impact will the downward pressure on investment manager fees have for advisers?


A forensic analysis of fund management charges by clients

The two big asset manager stories over the last year or so were first of all when Vanguard announced a flat 0.3% management fee, regardless of how much an investor has in their account. This fee includes access to a CFP professional who will provide financial planning and investment advice. This was followed this summer by Fidelity’s announcement of 0% fees on two of their funds. These price developments will inevitably move closer to Irish shores over time and when they happen, they will be (rightly) trumpeted loudly by providers. This in itself will bring a keen focus from clients on the level of fees that they are paying into their existing funds.

We are certainly not advocating that fund management fees are the only factor for investors to consider – far from it in fact. But should fees reduce substantially, the reality is that investors will more regularly raise this issue with their adviser who will need to be prepared. The adviser will need to be crystal clear about their rationale for guiding clients towards higher charge funds. Higher cost funds make sense for many clients – you just need to be ready to clearly articulate the reasons!

The bottom line is though, fund management fees are likely to come under ever-greater scrutiny.


A lower overall fee creates adviser opportunities

One of the most common refrains I hear from advisers being unable to charge 1% (or even 0.75%) trail for their own services is that the current fund management fees don’t allow it. They argue that when you add 75/100 bps on to  a high management charge, that the overall charge is simply too high.

If the fund management fee went to 0%, surely this problem goes away? Now the only charge that would apply would be your 0.75% / 1%, which would not overly impact the returns achieved by clients. Could you charge a higher trail then and justify it to your client?

I’m not so sure that a reduction in fund management charges would be the silver bullet that some think it might be. The argument of fund management charges being too high sometimes hides an underlying issue of some advisers being unable to engage and convince clients in the value that they themselves (the adviser) are adding.


Can you articulate and demonstrate your value (and justify higher trail)?

How do you actively demonstrate to your client that you are worth paying 1% per year to? How clearly do you set out to your client the value that you add and the difference that you are going to make in helping them achieve their lifestyle and financial goals? How do you demonstrate the expertise that you bring to the table to help them, and both the quality and amount of work that you do on their behalf? How do you convince your client that they are fortunate to have found you, and that your 75/100 pbs charge is worth every single euro?

If you are not able to do this, even with reduced fund charges your client will still baulk at the charges. Now they will realise that most / all of the ongoing management charges are going to you and will really want to understand what they are paying for. Your fee won’t get “lost” any more in an overall charge.

To be able to articulate and demonstrate your value, you need to take a step back from your business and spend time identifying the value that you add and the difference that you make to the lives of clients. You need to articulate that value, your advice methodologies and be able to demonstrate the structure and rigour of your approach.

Only then can you justify your trail amount, irrespective of the direction of fund management fees in the future.

What can we learn in Ireland about adviser charges after RDR?

RDR, the Retail Distribution Review in the UK – do you remember how it was to herald the end of the world for advisers in the UK? So what has actually happened, and what can we learn in Ireland from it?

I came across reports about 2 pieces of research that were carried out in 2017. The first was research carried out by the Financial Conduct Authority (FCA), which examined the different charging structures used by advisers. The second piece of research was carried out by New Model Advisor and looked at how much the Top 100 firms (as decided by them) actually charge their customers.

Interesting stuff, and I think there’s lots to learn for us in Ireland…


Fund based charging is alive and well

RDR was implemented in January 2013, and initially it was expected that commission as we know it would become a thing of the past in relation to pension and investment business. However trail commission has remained in place for legacy business written before RDR, and also the concept of “adviser charging” was introduced. This differs from traditional commission in that product providers, while being able to facilitate a payment of the adviser’s charge by deducting it from the investment, can only do so after obtaining and validating instructions directly from the client. So the adviser has to be able to articulate their proposition and justify their charge.

Now whether the adviser is paid by adviser charging or by fee, there is more focus on the quality of the adviser’s proposition and greater transparency of the charge amount.

So has this changed the structure of payments; whether advisers are being paid hourly rates, fixed fees or ad valorem (% of investment) fees?  Well not really according to the FCA research.


Type of charge

Number of firms

Initial charge Ongoing charge
Charge per hour 1,663 1,259
Percentage of investment 4,130 4,362
Fixed fee 1,971 1,215
Combined structure 905 799


So the majority (by some distance) still utilise the ad valorem fee basis, more than all of the other methods put together. Even more interesting, about 80% of the payments to advisers (by value) are actually collected via a provider / platform. This suggests that even when fixed fees / hourly charges are agreed, in many cases the clients prefer the fees to be taken from their investments rather than actually writing a cheque.

However there is also a sense that higher levels of one-off fees are being charged for one-off pieces of work, rather than the more blunt ad valorem basis. This makes sense – charging clients higher one-off fees for once-off complex pieces of work.


What level of advice fees are being charged?

The New Model Advisor research is very interesting in terms of the actual amount of fees being charged. Some of the highlights of this research include (based on a client aged 40 with a £250,000 portfolio),

  • The average ongoing adviser charge is 0.87% p.a.
  • The total average charge for clients, including the adviser charge, platform fee and fund charge is 1.78% p.a. – the advice fee represents just under half of the total fee charged to the client.
  • 38% of firms charge 1.0% p.a. of AUM
  • The range of ongoing fees is 0.41% to 1.25% p.a. Many advisers were shocked that some of their peers charge as little as 0.41%!
  • Only 7% of firms charge over 1.0% p.a.
  • Fees are increasing overall as advisers are doing more work for clients.


What can we learn in Ireland?

I think there are a couple of learnings for Irish advisers. In truth, each of these probably deserves a full article on their own! But here is a brief synopsis of what I take away from this research.

  1. The ad valorem model as charged in Ireland by many advisers is consistent with practices in the UK. While it’s not perfect, and has some obviously conflicts, clients understand it and see it as an alignment of interests.
  2. Clients in Ireland generally prefer adviser fees to be deducted from their investments. Again this is consistent with our nearest neighbours. So what has RDR really achieved, beyond potentially greater transparency of fees?
  3. Irish advisors are often undercharging! I’m still amazed that many advisers still believe they can / will service a client properly for 0.25% p.a. What’s the reason for this?
    • I’m often told that our base AUM charges are usually higher. Is this actually true when we see the average non-adviser (platform and fund) charges at 0.91% in the UK? Does this stack up as a reason in Ireland, except possibly when some of the more esoteric funds are being used?
    • Or have some advisers in Ireland not developed enough clarity, confidence and capability to communicate their proposition, in a way that demonstrates the incredible value you provide to clients? 

Food for thought…

For me the overall takeaway for advisers is obvious. Develop crystal clarity around your proposition and the tools to communicate it effectively and relentlessly. The confidence to charge more will follow.


What’s driving the growth of Future Cashflow Planning?

Earlier this month I had the pleasure of working with some of the leading financial advice firms in United Arab Emirates over the course of a couple of days in Dubai (the photo is of the VERY impressive Burj Khalifa – the tallest building in the world today). My involvement came about as part of a brilliant programme developed by Zurich International Life to help advisers in UAE prepare for some major changes that will impact their market, probably in the not too distant future.

The Insurance Authority in UAE has flagged some substantial regulatory changes, of which the final details and dates are yet to be clarified. However all the consultation papers to date point to significant reductions in commission levels on products sold and restrictions on indemnity terms that can be offered, along with a number of other changes. The changes will result in better outcomes for consumers, however the changes also create enormous challenges for advisers.

So what has all this to do with Future Cashflow Planning, I hear you ask? Well advisers in UAE are looking at a possible drop of more than 50% of revenue when the regulations come in. It is a market where advisers today are largely remunerated by commission only, and the impact of the regulations mean that relying purely on product sales in the future will see advisers simply be paid less for the same amount of work. They really have two choices,

1. Write double the amount of business they’ve been doing to date or

2. Broaden their proposition beyond products, add more value to customers and charge accordingly.

The second option looks far more appealing to me.


What might this proposition look like?

Advisers in UAE are fortunate that they can look at other markets around the world that have transformed in recent years. If they look at USA, Australia, New Zealand, UK, Holland and of course here in Ireland, they will see a common trend. That trend is towards progressive advisers providing a lifetime financial planning service, where the client’s lifestyle aspirations for their whole life are identified, and then a financial plan is developed to enable the client to achieve that desired lifestyle.

Sitting at the heart of this is Future Cashflow Planning, giving the client a snapshot of their financial capability for every year of their life and enabling the adviser to answer those big questions for the client,

• Are we always going to be ok?

• Will we have enough money to live the life we want?

• Can I stop working today?

Offering this deeper and richer proposition to clients will potentially enable advisers in UAE to charge for their expertise along with / instead of charging for the products that they arrange. This has certainly been the trend in other markets. While of course this deeper and richer client proposition will not be appealing to every client, there is a large cohort of clients in every market to whom this service will appeal.


It’s not all about regulations though…

In Ireland it wasn’t regulatory change that heralded the growth of lifetime financial planning and the use of future cashflow software. Instead it was as a result of ambitious advisers watching the trends in other markets (particularly the UK) and seeing how the leading advice firms in those markets had extended their proposition into lifetime financial planning. It was clear that this deeper and richer client proposition results in a far more engaging and valuable service for clients.

Lifetime financial planning, built on the foundation of a future cashflow plan has been the single biggest shift in the advice market in Ireland (and these other markets) for quite a long number of years. It has redefined the value offered by financial advisers, and has enabled them to really establish themselves as a trusted professional in the eyes of their clients.

And in Ireland, the rewards have followed for advisers. They enjoy more valued and durable relationships with their clients, who are happy to pay for this advice year after year. Whether this is paid by fee, retainer or trail commission is not really the point – these are all simply methods of payment. The key point is that clients are willing to pay for advice year after year, irrespective of whether product transactions happen or not.


That has to be good news for advisers further afield, such as those advisers in UAE who are facing regulatory change. Commission reductions on products are of course a challenge. But the opportunity is there to broaden the client proposition, add enormous value to clients through the provision of lifetime financial planning and charge accordingly for this.



Image Courtesy Flickr – Tom Sespene – wajortom34