24th February 2025

Attracting Growth-Focused Financial Planners

“Amidst the ongoing consolidation and turnover of adviser staff, it's easy to assume that companies are primarily seeking advisers for client bank management” says Paul Harper, Managing Director of Paul Harper Search. However, this overlooks the persistent desire for growth in the medium term, especially among PE-backed businesses undertaking rapid acquisition strategies. 

Of course, with an ageing population of financial advisers, many of whom have been very successful through their careers and are now looking to exit, it's fair to say that plenty of advisers are not particularly chasing new business. However, if you are a PE house or a buy-and-build consultancy backed by a PE house, private office, or other, you may well have debts to repay and a need to drive new business to increase the value of your firm. 

How do you do that in an environment where Financial Planners command high salaries and many appear to be on a glide path to retirement? 

Introducing the modern Financial Planner focused on growth. This individual not only aims to serve their clients exceptionally but also understands that this can expand their client base through recommendations and consolidation. While organic growth may seem more challenging to maintain than acquisitional growth, it's a real opportunity for companies that foster the right environment for their advisers to succeed and hire the right type of advisers. Providing a supportive environment is crucial for Financial Planners to thrive and grow.

How to find a growth-focused Financial Planner? 

The obvious thing is desire. Unless you have a Financial Planner who desires to succeed, you will be left with someone who just wants to successfully and professionally manage their book of clients without going the extra mile. There's nothing wrong with this. For many who've worked many years to get into this position, they are now enjoying the fruits of their labour. However, there are plenty of Financial Planners, often the next generation of Financial Planners who have a career ahead of them and the skills and experience to grow a Financial Planning book. Typically, these people will be employed and will expect a reasonable level of salary for maintaining their existing client book, but they will have capacity and energy to grow it through networking and referral.

So how do you secure someone like that?

Well, the first thing to be aware of is that if you want to secure a Financial Planner with a growth mindset, you have to have the right Financial Planner proposition to attract them. This means a competitive basic salary, a great bonus scheme, and the clients to help them grow.  If the client bank is too big or the average client size is too small, they'll be overworked and unable to do so. If, on the other hand, they're given a reasonable level of clients, a good basic salary and an attractive bonus scheme, it should be possible to secure people motivated to grow an existing client book.

Today's advisers are not the same as the advisers 10 years ago. 15 years ago, we lived in a commission regime with initial commission as the primary motivator for new people entering the market. It was possible, in theory, to join a business with no clients and quickly build up an income. However, as I pointed out in my book, ‘Reinventing the Financial Advice Profession’, the days of this are long gone. Back then, a £100 a month pension could pay an adviser up to £600 in initial commission. RDR ended that, and today’s typical initial fees of 3% would now only be £36 in year 1. Therefore, expecting someone to start with few or no clients is a non-starter.

However, today Financial Planning practices are very different to how they were then. The successful practices now have many clients that need servicing, and the bigger drive is to ensure compliance with Consumer Duty and how to deal with smaller clients.

If we focus on larger clients, they normally need a human adviser who gets to know them, nurtures them, and provides excellent advice, usually backed by a paraplanner and an admin team. This is much more like an accountancy or law firm than an old-fashioned IFA.

Modern IFAs look more like an accountancy or law firm with specialists, a full team of Financial Planners, but also plenty of paraplanning and admin support. With the challenges of Consumer Duty now very clear, many are focusing on building a low-cost adviser direct proposition to give advice to low-net-worth clients and those with small amounts of assets to manage. Many of these are charging on a transactional basis. 

Despite that, I have recently been told of companies making a profit on assets under management as low as £60,000 with an ongoing adviser charge of 1%. 

In Summary

The financial advice industry is undergoing significant transformation, driven by consolidation, demographic shifts, and evolving client expectations. 

While many advisers are content with managing their current client base, a new breed of growth-focused Financial Planners is emerging. These individuals are not only skilled in providing excellent service but are also motivated to expand their client books through networking, referrals, and strategic advice.

To attract such talent, firms must offer a compelling proposition—competitive salaries, attractive bonus schemes, and client bases that allow for growth without being overwhelming. As the industry shifts towards a model resembling professional services like accountancy or law, with robust support systems including paraplanners and administrative teams, the key to success will be creating environments where both advisers and clients can thrive. Firms that embrace this approach and adapt to the challenges of Consumer Duty and the changing landscape will be well-positioned to achieve sustainable, organic growth and secure their place in the future of financial planning.

Business Development