Is your Brokerage a cut above the norm, if not why not? 10 Observations from our recent Brokerage workshops

Part of what we do across our CRM & business advisory services is attempt to aggregate best practice in the Brokerage sector when we come across it, then share it with our own inputs where possible in our 1-2-1’s & Group workshops. It isn’t particularly clever, however we do find that the Brokerage sector is a fragmented & often isolated world that requires this. There are circa 1,000 Financial Brokerages, with 80% having less than 20 staff. Covid & digital advancements have compounded this.

Inertia & lack of access to best practice are stifling factors to a Brokerage upping their game across Compliance, advice, technology, marketing etc.

Most Brokerage owners are also the main advisers within the practice, which doesn’t help when it comes to working on the business rather than in. I have just finished a round of Brokerage workshops across Galway, Cork & Dublin in past couple of months. There were 10 key observations & things that I didn’t see Brokerages having or doing on my latest round included;

1. Little to no structured & more importantly papered “house views” across;

·???????Remuneration Models

·???????How you define commonality/consistency in needs analysis/advice across a team

·???????Who you recommend & why as a Brokerage, demonstrating fair analysis

·???????SLA’s for clients@different segmentation levels, e.g a high net worth client receives 2 meetings per annum, cashflow modelling, quarterly valuation reports, access to portals etc.

2. A recent Central Bank themed inspection around SP Investments sampled a number of Brokers in September 2022 to see could they show demonstratable processes/linkages to recurring income & service for clients. Many couldn’t clearly define when asked, it was more ad-hoc in nature or not being done at all. This must be remedied. I can share this with anyone if you drop me a note.

3.No pitch deck for a client as a new prospect. 5-6 branded slides about what they could expect from you as your product/service before factfinding even begins. The industry’s product isn’t pensions or protection, it is financial planning, most on these workshops were losing sight of this on a regular basis. A terms of business is a functional/technical document predominantly that isn’t properly walked through.

4. Most Brokerages are saying yes they consider SFDR without really understanding the underlying consequences for advice & clients. They aren’t alone, it is a mess from the Regulators to providers to Brokerages to the client experience which must now encompass factfinding, risk profiling etc.

5. Not one Brokerage had a “claims process” for their clients on their websites, included in their terms of business or template statements of suitability for a client. Protection is claims, it is what the Brokerage industry persuades the client to engage on, yet we don’t link it beyond point of sale for a client. We are missing valuable ongoing engagements.

6. Very few Brokerages are proactively factfinding digitally. This is a reflection of tools in the market also(including our own), this must evolve asap as we catch up to other digital experiences. Only one digital fact-find in the marketplace stands out.

7. Not enough Brokerages are counting their time spent on client work on the CRM, time sheets etc. the way other professions such as Solicitors do well(too well!). How as an industry can we fully demonstrate value or charging models without diligent processes. Our own CRM allows this yet we know it is drastically under utilised.

8. Of the few Brokerages who operate their own bespoke marketing/engagement strategies, the few who do are too focused on client acquisition activities rather than retention models. The vast majority of Brokerages have clients who they are dis-engaged from, yet they have “bought” off them once yet never harvested for further reviews. I’d recommend look after you hold firstly, then grow.

9. The owner/shareholders who have attended these recent workshops are not priming their Brokerage for an exit strategy, I expect most will leave it too late. A 5-7 year lead in time is required for a structured & more lucrative buyout/merger plan.

10. A significant amount of Brokerages continue to service a portion of their client bank that produces no ongoing income without any analysis or revisions. Loyalty, service, reputation and soft links are all positive underlying reasons why this happens, however in this administrative & compliance heavy environment, it is unsustainable & a hangover of older models.

I hope you found these observations of use. The Brokerage market share now stands at 76% of financial planning & linked products, up from 54% a decade ago. Improving some of the above will only grow this in a disjointed marketplace with growing demand for financial planning services.