How to obtain the Holy Grail of Practice Ownership


Practice ownership is the ultimate goal of most professional financial planners.  Being in control of one’s own destiny is the major reason many people seek a career in financial planning as well as the financial rewards that come with running a successful business.  It has been getting harder over time to achieve the goal of practice ownership, and the new reforms are likely to make it even more difficult to achieve.

Reasons for the increased barriers to practice ownership include the following:

  • Increasing costs
  • Downward pressure on upfront fees
  • Constant negative media coverage of the financial planning industry
  • Increased competition
  • Cost / risk of purchasing practices
  • More discerning prospective clients.

To obtain the holy grail of practice ownership, your two choices are to build, buy or a combination of both. If you have the funding, the quickest way to practice ownership is to buy, however this comes with considerable risk including:

  • Compliance – is the book you are buying a compliance risk? What risks are lurking in the filing cabinet?
  • Cost – is the cost reasonable, or would it be cheaper to build from scratch?
  • Alignment – are the clients aligned to your style and value proposition?  Will you retain them?
  • Poaching – will the exiting financial planner set up shop elsewhere and poach the clients back?
  • Has the client base been burned by the existing adviser?

If your preferred option is to build your practice, here are some tips to help you succeed:

  • Partner with a dealer that will help you achieve your goals via their practice management program.  Advisers generally place a larger emphasis on the level of fees or splits they pay to the dealer but very little attention seems to be given to what you get in return for your fees. If you join a dealer that generates good quality leads, does it matter if you are paying them more than the amount you pay your current dealer that generates no leads?
  • Differentiate yourself by developing a strong and unique value proposition that will make you stand out from the crowd. In the current market, clients are looking for financial planners that can demonstrate they have a strong value proposition in managing investments and investment risk. Advisers who are strong in this area are the ones currently writing the bulk of new business.
  • Build your business on the back of a diversified marketing plan.  This includes developing referral relationships with centre-of-influence and building your profile via advertising, seminars and so on.  Getting the marketing ‘mix’ right is important – because every piece of marketing impacts on the success of your other marketing efforts.
  • Wholeheartedly believe in doing the right thing by the client – no matter what. If you genuinely enjoy looking after your clients, and demonstrate a passion for helping them, you will win the client almost every time. This comes naturally to good financial planners.
  • Ask every client and prospect for referrals, usually using a ‘softly softly’ approach (as recommended by marketing guru Stewart Paul) such as “If you have any friends or colleagues who also need advice, I’d be pleased to accommodate them. Please feel free to give them one of my business cards.”  Turning your clients into advocates of your service will result in a steady stream of prospects that have already been sold on you prior to your initial meeting with them – so you can expect higher conversion rates from client referrals.  Note that some clients may not refer to you because they think you are too busy – so make sure you let all of your clients and prospects know that you will always accommodate referrals from them.
  • Target those people who not only have money to invest but also are motivated to invest it. For some planners, this means targeting retirees and people accepting redundancies.  The key is that you choose target markets which fit your skill & knowledge set – and as a result you will become known as an expert in that area.

The proposed reforms will make the future more challenging for professionals wanting to establish their own practice, but with the right approach the new environment might just work in your favour.

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