Could having a financial planning side hussle help with the succession of independent financial advice firms?

Having a financial planning-only side hustle could indeed offer a lifeline for the succession of independent financial firms, especially in the context of the challenges highlighted by Warren Ingram from Galileo Capital. Let’s explore the potential benefits:

1. Diversification of Revenue Streams: A side hustle in financial planning, distinct from the core advisory services of a firm, could open up additional revenue streams. This is crucial in mitigating the risk when traditional revenue faces pressure from regulatory changes and market dynamics.
2. Reducing Dependency on External Funding: By establishing a financial planning arm that potentially requires less regulatory capital compared to traditional financial advisory services, firms can lessen their dependency on unfavorable funding solutions. This could be particularly valuable given the high interest rates and stringent conditions often imposed by banks on the acquisition of such firms.
3. Attracting and Retaining Talent: Offering younger, perhaps less financially equipped, professionals the opportunity to engage in and eventually own a part of the financial planning side hustle could serve as a strategic move to ensure the succession and sustainability of the business. This can also serve as a stepping stone, preparing them to take over more significant roles within the main firm.
4. Building Client Trust and Firm Resilience: A dedicated financial planning service can deepen client relationships by focusing solely on planning without the pressure of selling products. This could enhance client trust and retention, which are critical during times of ownership transition.
5. Strategic Independence: As firms grow and potentially come under the radar of larger consolidators, having a robust, independently profitable side business in financial planning could provide leverage and strategic options. It could serve as either a negotiation tool or a sustainable alternative to merging with larger entities.

Each of these points reflects a strategic dimension where a financial planning-only side hustle not only supports the continuity of the business but also fortifies its foundational principles against the prevailing winds of the industry’s consolidation and commercial pressures.

If you would like to know more about financial planning side-hustles in UK or South Africa, click the links.