Focus on what you can control

By: Duncan Parkes
Old Mill Financial Planning

Structuring a Financial Planning business can be difficult. Applying some investment principles can paint an interesting picture, says Duncan Parkes.

The investment philosophy

1 Structure

The portfolio structure must be based on the emotional and financial tolerance for, and need to take, risk. It involves selecting sensible risks to take and using high quality, low cost funds to capture the rewards available for doing so.

2 Governance

Delivering the greatest chance of a successful outcome and avoiding fads is important. Much of this work is done behind the scenes and goes unseen.

3 Hand-holding

The hardest part of investing is having the confidence and emotional fortitude to stick with the programme through thick and thin.

4 Rebalancing:

This seeks to ensure that the risk level of the portfolio remains where it was specifically designed to be. This takes discipline.

5 Manage costs effectively:

Reducing costs is one of the free lunches in investing, and is achieved without taking any risk. Costs come in two forms – financial and emotional.

The business approach

1  Structure

Structuring a business can be difficult. Too often, focus is given to the things that might change and we therefore try to predict the future.

When looking back over the history of financial advice we know that change is constant, be that through regulation, product innovation or technology. On the flip side we know that some things don’t change.

The evolution of Financial Planning has introduced new concepts in recent years that will probably be around for years to come.

We offer:

•  Peace of mind

We have seen through the issues experienced with robo advice that the public are looking for peace of mind and reassurance when making investment decisions. The choices in terms of provider, product and fund choice when combined with media noise makes people question if they are making the right decision.

Giving people the confidence to make informed choices over their finances could form a key part of your offering.

•  Freedom

People lead busy lives and do not necessarily have the time and/or inclination to manage their own finances. Engaging with a Financial Planner can give them the freedom to focus on other areas of their lives safe in the knowledge that a professional is looking after this aspect of their life.

The majority of our clients prefer to be engaging in their favourite pastime rather than worrying about their money.

•  Opportunity

One of the true benefits of Financial Planning comes in the opportunity it can bring. Whether this be through early retirement, having the ability to make gifts to family members, fulfilling a bucket list etc. Financial Planning can bring these opportunities to life.

Perhaps this is one of the key differences between financial advice and Financial Planning. Financial advice is about investing money; Financial Planning is about how much of it they can spend.

Comprehensive Life-focused Financial Planning has been benefitting clients for years and will continue to do so into the future.

With this in mind, you can scope a Business Plan in more detail with emphasis being given to three key areas:

  1. What exactly are you going to offer to your clients i.e. what is your offering in terms of Financial Planning (including cashflow), investment management, ongoing planning meetings etc..
  2. What resources do you need to be able to deliver your offering? Key considerations here include people and technology.
  3. Taking these resources into account alongside regulatory fees, PI cover etc. how much do you need to charge to allow you to resource and deliver your offering? In essence you are creating a business cashflow in a similar way to the cashflow you create for your clients.

2  Governance:

Once the structure of a business has been established it will only remain in place if there are the controls in place to manage it.

One of the fundamental aspects of governance is culture. The FCA defines culture as …

‘The habitual behaviours and mindsets that characterise an organisation’.

If the owners of the business have created the right culture, governance within the business becomes almost self-policing as everyone is working together to achieve the same end goal.

Introducing policies and procedures that aren’t followed by the team does not necessarily mean the policies and procedures are wrong. It is more likely this means the culture within the business is wrong.

Establishing the right culture within a business is therefore essential in allowing a business to implement the level of governance needed to manage it.

Our culture has been defined by the character traits we ask all of our staff to display when working at Old Mill.

Simple concepts such as being nice to work with and open minded all help make the business a better place to work which improves the culture.

Recognition and reward play a big part in setting the right culture as it is important to be seen to be giving something back.

Contrary to popular belief it is not all about the money.

One of the best things we did was to give all staff a paid day off on their birthday.

We also operate a system whereby member of staff can nominate other members of staff to receive WOW points (£100 to be spend on-line).

Once the culture is there it becomes much easier to govern the business.

By governing the business we mean ensuring compliance with policies, standards and procedures that will allow the business to execute its strategy whilst managing risks.

3  Hand–holding:

As with investing, having the confidence and emotional fortitude to stick to the plan can be tough.

Throughout the journey your business goes on, there will be moments when both the leaders and team within the business might start to doubt the direction of travel. Having the confidence to avoid knee jerk reactions or acting on emotions alone can prevent the destruction of a business as it can an investment portfolio.

Market volatility, client/staff losses, increasing regulatory costs, pressure on fees, adverse media coverage of IFAs etc., etc. can all have an impact on you and your team’s faith in the plan.

In the same way your clients look to you to give them the peace of mind that they are going to be all right, your staff may also require similar reassurances.

The most successful Financial Planning firms in terms of delivering true Financial Planning are those that are as close (if not closer) to their staff than they are to their clients.

A lot of this is again driven by culture and embedding a culture where managers regularly talk to and more importantly listen to their staff can help build trust and a feeling of …

‘We’re all in this together.’

Most businesses operate some sort of annual appraisal system, but a year is a very long time and shorter more frequent meetings with staff can go a long way in ensuring you are all going on the same journey.

These meetings do not have to be detailed and can be as simple as:

  • what has gone well since we last met
  • what has not gone well and
  • where should the focus be, going forward?

It also provides management with a platform to provide the reassurances mentioned above.

4 Rebalancing:

How many people rebalance their business? Day to day life within a business can often lead to much more time being spent in the business rather than on it.

Taking the time to sit back and reflect on where the business is against its objective or business plan is vital in ensuring you continue to run the type of business you want.

Earlier in this article we discussed your offering, the resources you need to deliver it and the fees you would charge for delivering it.

Just as you would rebalance an investment portfolio it is important that you rebalance your business to ensure you remain on track.

Quite often decisions taken by business owners are made on impulse, reacting to immediate issues, rather than with reference to the business plan.

If you have defined your offering, the resources you need to deliver it and the fees you need to charge it is worthwhile taking the time to sit back and ensure you are running your business as per the plan.

Examples might include ensuring:

  • You are delivering your offering consistently across the piece
  • Your charges continue to reflect the service you are providing
  • You continue to deliver Financial Planning and have not resorted back to product sales.

5  Manage costs effectively:

There are external factors within our profession that can result in costs beyond our control; the biggest of these being PI Insurance and regulatory costs. It is therefore important to carefully manage the costs we can control.

Setting budgets for your business and sticking to them can make day to day business life so much easier. £5,000 of costs within a business may not seem like a lot, but if you relate that to the work involved in generating and maintaining £5,000 of income from a client the benefits of managing costs become obvious.

This is particularly important for those in non-client facing roles who may not fully appreciate the impact excessive expenditure can have on the need to generate income.

As well as setting budgets it is also worth regularly reviewing your business costs to see where efficiencies can be gained; technology plays a huge part in this.

It is also worth remembering when looking to grow a business that technology is much more scalable than people.

Simply throwing more people at an increased workload will not help develop a profitable business.

With technology there are three perspectives to consider:

  • The use of technology to manage the day-to-day running of the business itself
  • The use of technology to manage the client
  • The use of technology to enhance and develop the client experience/relationship i.e. client facing technology.

Combining the right technology with the right people is a huge challenge, but if done well the results are incredible.

Hopefully this article has demonstrated that creating principles for your business as you would a centralised investment proposition can help bring an element of structure and control to how you operate.

One of the best ways to futureproof a Financial Planning business is to ensure you give your business the same level of care, consideration and attention you give to managing your client’s money.


  • Create a business cashflow in a similar way to the cashflow you create for clients.
  • Keep close to your staff; know them as well, if not better than you know your clients.
  • Establishing the right culture makes governance of the business easier.
  • Technology is key to greater control and efficiency, leaving more time for clients
    and staff.
  • Give your business the same level of care and consideration you give to managing your client’s money.

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