I recently attended the Personal Finance Society’s Conference in Birmingham which was a useful exercise in terms of gauging the mood amongst the advisory community and finding out what others view as the key topics as R-Day approaches. With regards to adviser sentiment, it would appear that the vast majority or advisers are upbeat about the post-RDR landscape and the opportunities that the new regime presents. A number of important issues emerged over the two-day event, but a recurring theme that constantly cropped up was the importance of differentiating oneself from the competition.
There are a number of ways that adviser firms can stand out from their peers, but one method that we have been keen to advocate is through the attainment of advanced qualifications. The new entry standard may be the QCF Level 4/Diploma, but the ‘gold’ standard will be those that have or are striving to achieve Chartered status. We strongly recommend that our offices aim for this and a third of them have already done so. In terms of discussions we have with new potential firms, we will continue to pay a premium for businesses that have already achieved Chartered status and are differentiating themselves on that basis.
Another way that firms distinguish themselves – and increase their attractiveness to potential acquirers – is by concentrating on a specialism. We tend to find that those focusing on a particular type of client such as high net-worth individuals, accountants or dentists or placing emphasis on an area of their business such as their seminar activity or their marketing, trade more strongly than their rivals. In instances where we have welcomed such firms onboard, we encourage the principals to share best practice with our other offices where appropriate so that their specialist knowledge and expertise can be shared.
While such firms can expect to thrive post-RDR as they have a truly unique selling point, the very nature of their specialities can cause some confusion in terms of the various definitions being bandied about. There seems to have been a misappropriation of the term ‘whole of market’ to mean ‘independent’ by some parties, but the reality is that this isn’t necessarily the case as of next year.
To this end, we don’t place any greater value on independent advisers than we do on restricted advisers when it comes to looking at potential acquisitions. There have been various discussions as to the importance that clients themselves attach to the independent tag emotionally and rationally and that’s as may be, but the bottom line is that it means very little with regards to the value of the business.
David Hesketh is group M&A manager at Perspective Financial Group