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Table of contents
1.0 INTRODUCTION........................................................................................................................... 3
1.1 GLASSAGH CONSULTING .......................................................................................................... 4 2.0 ABOUT THIS GUIDE .................................................................................................................... 4
3.0 IDEA 1 – YOU HAVE TO SKATE TO WHERE THE PUCK IS GOING TO BE............................. 6
4.0 IDEA 2 – ONE PAGE ACTION PLAN ........................................................................................... 8
5.0 IDEA 3 – BUSINESS VISION........................................................................................................ 9
6.0 IDEA 4 – VISION TEMPLATE..................................................................................................... 12
7.0 IDEA 5 – THE OPPORTUNITIES IN OUR WORLD ................................................................... 14
8.0 IDEA 6 – COWS TEMPLATE...................................................................................................... 16
9.0 IDEA 7 – SEGMENTATION CAN MAKE YOU MONEY ............................................................ 18
10.0 IDEA 8 – HOW TO SEGMENT ................................................................................................... 20
11.0 IDEA 9 – SEGMENTATION IDENTIKIT...................................................................................... 21
12.0 IDEA 10 – SHARE OF WALLET ................................................................................................. 23 13.0 IDEA 11 – CREATING COMMUNITY ......................................................................................... 24
14.0 IDEA 12 – SHARE OF WALLET MATRIX................................................................................... 26
15.0 IDEA 13 – ARE YOU BEING PAID FOR WHAT YOU DO?........................................................ 28
15.1 FIXED FEE.................................................................................................................................. 28
15.2 TIME RELATED .......................................................................................................................... 29
15.3 FEE PER CLIENT OR CUSTOMER ........................................................................................... 29
15.4 RETAINERS................................................................................................................................ 30
16.0 IDEA 14 – PRICING YOUR PROPOSITION............................................................................... 31
16.1 EXISTING CLIENTS ................................................................................................................... 31
16.2 NEW CLIENTS............................................................................................................................ 32
17.0 ACTION PLAN TRACKER .......................................................................................................... 33
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1.0 Introduction
In the post RDR world, with its aims of delivering fairer treatment for customers, the financial
adviser community needs to completely reconsider their business propositions adapting them
to really meet their customers’ needs.
In our newly published guide; Evolution not revolution – 14 ideas to take your business
forward, we offer practical help to businesses in how to rethink their propositions to meet
many of the new challenges in what is a quickly evolving and armed with a host of digital
tools, increasingly savvy society.
Nothing should ever be left to chance and in this guide we offer practical support in the form
of a series of templates to create vision statements, action plans and the tools to then deliver
them.
We share a COWS (Challenges, Opportunities, Weaknesses & Strengths) matrix that when
completed will help those using it to really understand and map all aspects of their future
strategies.
We even help with advice about how to create a greater “share of wallet” by using better-
engaged communication to build a real “community” relationship between the advisers and
their customers.”
Derek Bradley, CEO, Panacea Adviser
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1.1 Glassagh Consulting
John Joe McGinley is head of Glassagh Consulting
Glassagh Consulting can help you make the ideas you have for
your business a profitable reality.
If you desire help with any of the following:
• Making your vision work for your business
• Segmenting your clients
• Developing a sustainable, attractive and profitable customer proposition
• Using social media to attract new customers and communicate with your clients
• Identifying the right technology for the future of your business
• Defining and implementing profitable processes for your business
• Motivational team building
Contact John Joe at [email protected]
Follow him on Twitter @glassaghconsult
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2.0 About this guide
You may think you can do without planning for the future, but businesses in our profession
now need to be on the lookout for what today’s rapidly changing landscape means to them
and the clients they deal with. Have you considered these three key planning questions?
Do you see opportunities that others don’t?
Change creates many things but paramount amongst these is opportunity. Have you
considered the new opportunities in your chosen markets and the UK economy?
Can your clients live without you? Client’s options evolve constantly.
If the service proposition you offer isn’t essential to their lives, clients could move on or even
decide to do many things themselves. What really makes you different and why should
anyone deal with you?
Are you and your business learning as fast as our world is changing?
No business can afford to stop learning and planning for change. How much time do you set
aside to plan for the future?
I'd urge you all to consider these questions and start planning for the future. I know it’s a
business cliché, but we all must make sure that we devote some time in our busy schedules
to work on our businesses and not just in them. This guide can help, it contains proven
business evolution tactics that are used by many businesses of all shapes and sizes. Each
one can help you evolve for the future.
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3.0 Idea 1 – you have to skate to where the puck is going to be
There’s a great story about Wayne Gretzky. Now for those of you who don’t follow ice hockey
or know who he is, Wayne Gretzky - nicknamed The Great One - is recognised as the
greatest ice hockey player ever.
A journalist once asked him ‘why are you so good?’ Always a nice question to be asked. His
answer has gone down in both sporting and business mythology and is often quoted. He
replied:
‘Most players skate to the puck, I skate to where the puck is going to be’.
Success for any business in our profession has to be about identifying what clients and
future customers want and to deliver this profitably not just once but on an on-going basis.
No business can do this without a proposition and plan of action to take advantage of the
many opportunities we face in UK financial services.
We have an ageing population, an improving economy, auto enrolment and the rise of social
media. Each one full of opportunity for every business regardless of size, if they are prepared
and ready to take advantage.
So why are so many businesses failing to take advantage of these opportunities?
The key to success in life and in business is having a plan. Be honest how robust are many
business action plans? Do many even have one? If they do not have one, then how will they
take advantage of the opportunities which are all around us?
The future of any business really does depend positively or negatively on how they plan for
the future.
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The winners of the future need to consider and have answers to the following questions:
Will your business be involved in the new opportunities, if so how deeply?
How robust is your plan to exploit these opportunities?
Which clients will you focus your attention on?
What services will you offer?
How will you be remunerated and how will you satisfy the regulator?
A business plan does not have to be a large academic tome it should be your roadmap to
success and as long or as short as you want it to be. What it must contain are the ideas you
will utilise to evolve your business and take advantage of the opportunities we face. As you
read through this booklet why don’t you use our simple one page template to start collecting
your thoughts?
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4.0 Idea 2 – one page action plan YOUR BUSINESS VISION
YOUR GOALS
OPPORTUNITIES YOU WILL EXPLOIT
YOUR ACTIONS
YOUR BUDGET
YOUR FIRST STEPS
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5.0 Idea 3 – business vision
I can see clearly now
We operate in a world of constant change. This brings many things, but paramount is stress.
This is usually caused because businesses are time poor. And most are time poor because
they don't have a clearly defined vision of what they want to achieve.
Vision isn't some motivational poster of a ship sailing into the sunset, or a climber celebrating
their ascent. Vision for any business is about direction, and is the basis for measuring the
progress of any action plan that's produced. This means the business has a clear roadmap
directed by them and not adversely impacted by the events that befall constantly in our ever-
changing world.
A business vision is what you want to achieve and why.
The benefits to any business of having a clearly defined vision are:
everyone understands where the business is going
there's a driver for change - a plan
you can see where you want to go and where you currently are
it can be shared with staff, clients and alliances
a good vision can attract clients, staff and new alliances
Where do you start?
A great way to look at business vision is in chunks, and there are normally four key stages.
Stage 1
Purpose - what does the business do and who does it do it for?
Financials - what profit are we aiming to achieve?
Stage 2
Scale
How many clients will we have?
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How big will we aim to grow?
How many advisers do we need?
Resources
What administration back up do we need to achieve this?
What skills must they have?
How do we manage this, for instance reporting lines?
Stage 3
Marketing and services
What will our service proposition look like
How much will we charge?
What will our business mix look like?
IT and processes
What back office system will we need?
How will we use social media?
Other things to consider are premises and the end game - is it to grow or be bought? Don’t
forget this is vital in any vision!
Stage 4
A good framework is to take time to sit back and get the key people involved in your business
and life (including partners and friends) to answer the following questions:
What is it that you actually do? The best answer I've heard is 'I make peoples financial
problems go away'
What do you offer clients? (Please don't think product)
What would you like to be known for?
What are the key roles that are needed for the vision?
Who will you work with in the future?
Where will you work in the future (markets/client types)?
What technology will you need?
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A good vision statement can help any business start to see where they're going a little more
clearly.
If we want change then we have to act. Once you have written down the answers to these
questions, it’s time to begin to document the vision you want to build for your own business.
You need to make it real – you need to write it down. Remember that if we continue to do
what we’ve always done, then one thing is certain: change won’t happen in our business.
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6.0 Idea 4 – vision template
Your Vision Statement
Create your own vision statement by using the answers you have written down previously by
completing the template filling in the blanks. When you have done this get someone to read it
back to you.
VISION STATEMENT FOR __________________________________________________
WITHIN THE NEXT (INSERT TIME PERIOD) ___________________________________WE WILL
EVOLVE
INTO A SUCCESSFUL ( DESCRIPTION OF BUSINESS YOU WANT TO BUILD)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
WE WILL PROVIDE (DESCRIPTION OF SERVICES YOU WILL OFFER CLIENTS AND
CUSTOMERS )
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
FOR ( DESCRIBE THE CLIENTS AND CUSTOMERS YOU WANT TO DEAL WITH )
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
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AS A BUSINESS WE WANT TO BE KNOWN FOR (OUTLINE WHAT YOU WANT OTHERS TO
SAY ABOUT YOU)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Review what you have written and give it this simple test:
• Does it seem real?
• Does it motivate you?
• Is it achievable at a profit?
If so move forward if not what can you change?
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7.0 Idea 5 – the opportunities in our world
No one can see the future, but many can anticipate what it might bring. If we ignore what's
going on around us, there's a danger we let events dictate our future and have to constantly
react and fire fight, when the better place to be is in control of our own destiny.
There are those that take the time to look around them, observe their environment and how it
affects their lives and business.
They look at what's happening politically, how the economy is doing, technological advances
and how our society is changing. They take stock, step back and determine what change will
mean for their lives or business.
These people aren't budding astrologers or following in the footsteps of Nostradamus, but
sensible individuals and organisations that understand that every business must be ready
and prepared for the world of constant change we now operate in.
Some people and businesses do this intuitively, but most use a structured approach to see
how the future could impact them. For me, the most powerful structure for determining the
future strategy for a business has to be a COWS analysis.
COWS stands for:
Challenges
Opportunities
Weaknesses
Strengths
This is a brainstorming exercise but the most powerful aspect of COWS is that it begins with
the challenges that we face.
A COWS analysis starts very much with the challenges, which are the key issues facing a
business. This allows the other areas such as opportunities, weaknesses and strengths to
flow from these and relate to them.
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When carrying out a COWS analysis you’ll need to look at both the internal environment
(within the business) and the external environment (outside it). Internal factors can usually be
classified as weaknesses and strengths and the external factors are usually challenges and
opportunities.
The COWS analysis gives you information that’s helpful in matching a firm’s resources and
capabilities to the competitive environment it operates in. As such, it’s instrumental in
formulating and selecting your strategy for the future.
Changes in the internal and external environment can also present threats to any firm, such
as regulation or changing consumer habits.
Looking at the wider world can reveal new opportunities for profit and growth, for example
the new pensions changes, social media and the uses of technology. Also consider the
current and future needs of clients that aren't being met.
Identifying a firm's weaknesses will help identify what it lacks and where improvement is
needed, such as a lack of, or the lack of a social media presence and strategy.
Business strengths are the resources and capabilities you can use to develop a competitive
advantage.
Conducting a COWS analysis is simple and fun if you:
involve employees from all the key areas of the business
invite sympathetic outsiders who know the market and can provide an objective view
ask participants to collect and review information on internal resources and external
factors affecting the business
arrange a brainstorm to complete your cows analysis
decide whether you have the skills and objectivity to chair the session yourself, or
whether you should use an external facilitator
create an open and honest atmosphere – avoid judging or disagreeing with suggestions,
and try to draw out weaknesses and threats
List them on a flip chart and ensure they are copied and circulated to all attendees at the
end
Meet one week later to finalise your list and begin to prepare a plan of action
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8.0 Idea 6 – COWS template
CHALLENGES YOU FACE
OPPORTUNITIES TO EXPLOIT
WEAKNESSES TO ADDRESS
STRENGTHS TO UTILISE
ACTIONS FOR YOU TO TAKE
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Remember
C-S strategies: identify ways a business can use its strengths to overcome the challenges it
faces and make it less vulnerable to external threats
O-S strategies: pursue opportunities that are a good fit for a company’s strengths
O-W strategies: overcome weaknesses to pursue opportunities
C- W strategies: aim to address weaknesses to ensure a company is not susceptible to
external threats
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9.0 Idea 7 – segmentation can make you money
Segmentation is built on the concept that we all make purchases or decisions on our future
for one of three reasons:
We either need or satisfy a need, impulse or desire
Solve a problem, or
Make ourselves feel better
The first step for any business is identifying what elements of their existing proposition or any
future developments address these reasons. Then it’s a matter of marketing their proposition
and service according to each group of client’s wants and needs.
Segmentation is not a legislative requirement but a powerful business technique that can add
real value. If done correctly, it can:
Actually make money - Why waste valuable time and resources on ineffective and poorly
targeted Sales and Marketing exercises? Successful segmentation allows a business to
deliver the right message to the right people at the right time. It also ensures resources are
allocated towards the clients who can provide the greatest opportunity and revenue earning
potential.
Support a proposition - The ideal situation for any business is to deal with clients who
understand and desire the proposition they are delivering and who appreciate the value they
are receiving. Building a customer centric proposition is a lot easier if developed from the
bottom up centered on the needs, wants and desires of existing clients and future customers.
Make existing infrastructure work harder and smarter – With client records,
administration systems, and business networks the building blocks of an effective
segmentation system are already in place. With the right focus, structure and perhaps with
additional client research, segmentation can make a business more effective using the tools
they already own and pay for. The only real cost is time, with the rewards far outweighing
the initial investment.
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Help retain clients and increase revenue – The Pareto principle states that 80% of
revenue comes from just 20% of customers. This may ring a bell with many businesses.
It costs around five times as much to acquire new customers as it does to sell to existing
ones. So it really does make sense to know who the most profitable customers are and to
provide them with an excellent service proposition that they value and desire. This will
ensure that they remain loyal with the added bonus of helping maximise profitability. Satisfied
customers are also great advocates; they are more likely to recommend services to others
who can be key clients of the future.
Segmentation can easily identify profitability but it should also identify why people value
service and what they will pay for. Then it can help break from the Pareto principle and
maximise revenue potential.
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10.0 Idea 8 – how to segment
Segmentation is common sense and if you follow 6 simple steps any business can segment
its existing clients and future customers.
Here are six simple rules that can help:
1. Be specific about the clients in each segment. Avoid broad terms such as A, B and C or
Gold, Silver and Bronze. Use a descriptive narrative for each segment, saying what
appeals to them, what puts them off, what stimulates them and motivates them. This
information will help you visualize each segment and provide ideas for whatever
propositions you want to develop for them.
2. Don’t go segmentation crazy – the average is three segments in financial services, you
can have more but be clear why.
3. Measure, measure and measure again. Be clear who is profitable now and in the future
and certain about which segments are costing the business money and why.
4. If you identify clients that cost you time and money, change the way you deal with them
before you think about ending the relationship.
5. Speak to your clients, the secret to successful segmentation is knowing the answers to
the following questions:
What do your clients want from you?
What do your clients need from you?
What do your clients expect from you?
What do your clients value most from you?
What can you afford to provide for your clients?
6. Be clear on the differences between the segments you have established. It is these that
will determine the proposition and charging structure for your business.
It’s important to remember that there’s no one segmentation model set in stone. It can and
should differ from one business to another.
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11.0 Idea 9 – segmentation identikit
Use this template to help you segment and understand your clients
Name of Segment
Profile Identikit – Describe the segment as you would to a stranger
What do they want from you?
What do they need from you?
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What do they expect from you?
What do they Value from you?
What can you afford to deliver for them?
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12.0 Idea 10 – share of wallet
You may have heard the phrase share of wallet, or in plain English, the level of financial
engagement you have with your clients. You may feel that you are their primary source of
advice and financial education but have you actually maximised your relationship with them
and ensured they have consolidated their wealth under your guidance?
Or do they use other sources of financial advice?
The secret is to ensure you identify your most valuable clients and then understand their
lifestyle and life stage requirements. You can then provide them with a service proposition
that allows you to consolidate their assets. This will ensure that they remain loyal with the
added bonus of helping you maximise profitability.
Also if referrals are key to your business then clients who trust you to look after their wealth
and who realise you understand their needs are the greatest advocates for any business.
They are more likely to recommend you to others who can be your clients of the future.
More and more businesses are using technology to increase their client share of wallet. This
allows their clients to see the combined value of their savings, investments and retirement
income in one place.
Losing client’s hurts the bottom
line. Replacing a lost client
requires additional investments
in time, marketing and even
acquisition discounts to your
normal service proposition. As
many businesses have found in
our sector these acquisition
expenses may well offset revenues from existing client engagement for a year or more. If the
cost of acquiring clients to your business are high in terms of time and resource then
retention is even more important.
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Talk is cheap but figures count and a famous study on Retention from the famous business
analysts Frederick Reichheld and W Earl Strasser Jr highlighted the financial importance of
retention. They reviewed companies in nine diverse sectors and found that a 5% reduction in
the loss of clients boosted profits by a high as 85%.
These are huge profit improvements and demonstrate why retention is the new marketing of
our decade. The key is to understand the life stage of clients and maximise the advice
engagement at every stage.
You may have segmented by value but how well do you communicate what you can offer to
clients at every stage of their life and how well do you maximise your share of wallet with
clients.
13.0 Idea 11 – creating community
Think of yourselves as consumers how much value do you place on customer service and
how likely are you to tolerate a poor experience. Loyalty is important but it is more than just
excellent service at the point of sale. The secret to success in business in the future is about
creating community.
How you create this is down to ensuring you know your clients. It’s the logical extension of a
skill every hunter processes fact finding. Understanding the characteristics of your key
customers will help you decide where, when and how to communicate with them. You may
already have a client database which holds information such as age, sex and address, but
this is just the start. You need to consider other issues such as:
What are their financial goals and what matters most to them?
What other financial products and services do they purchase?
What is their activity pattern with you?
Why do they use you as their adviser?
What other sources of advice do they have and use?
What social media do they use?
What interests do they have?
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Getting this information could be a simple matter of picking up a telephone or building it into
your next review. This is segmentation brought to life allowing you to create an on-going
service proposition that not only retains your clients but allows you to maximise the
opportunities that their life stage and aspirations provides.
You can then look to develop a proposition that can allow you to:
Cross-sell to existing
clients
Consolidate client’s wealth
under your influence
Maximise and Increase
profits
Retain your clients who
promote your service
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14.0 Idea 12 – share of wallet matrix
ACTIVITY RETAIN CLIENTS CONSOLIDATION
ASSETS
MAKE YOUR
PROPOSITION
DIFFERENT
SERVICES
OFFERED
LOYALTY
PROGRAM
SOCIAL MEDIA
FACE TO FACE
CONTACT
PROFESSIONAL
CONNECTIONS
CLIENT
REPORTING
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TECHNOLOGY
USED
CHARGING
STRUCTURE
TELEPHONY
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15.0 Idea 13 – are you being paid for what you do?
Despite RDR, many businesses have not yet evolved the proposition and charging structures
that can deliver a sustainable business model for the future.
The facts speak for themselves:
27% of small to medium sized firms offer an hourly charging structure and only 39% offer
a fixed fee model. *
By 2017 the average adviser expects to have only 25% of all revenue from fixed fees. *
*Source NMG 2014
The research highlights to me that a significant number of advisers still have difficulty being
perceived as offering pure advice. They are far happier wrapping their services and
remuneration together with a product then using this as the vehicle for their payment.
This situation is understandable given that our profession was built on commission. It is
difficult but not impossible to change and evolve, and it looks very likely that the regulator
may drive this.
Many advisers still find confusion around fees and retainers and it’s worth reviewing the
options:
15.1 Fixed fee
You need to consider any fee level carefully and build in a contingency sum to cover
unexpected events that may require you to do additional work. Invoices are usually prepared
quarterly for a yearly fee.
BENEFITS NEGATIVES
The client can budget for expected costs. You may charge too little for work involved.
You can predict cash flow and manage the
business accordingly.
A competitor could undercut you.
Such fee clarity gives the client certainty
and engenders trust, which leads to repeat
business.
It’s awkward to go back and ask for a
higher fee if the work involved leads to a
loss for your business.
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15.2 Time related
This is the most commonly used fee structure. In this case each member of the firm has an
appropriate hourly charge rate. Any work completed for a client or customer is logged on a
time recording system and invoiced, normally each month. The client or customer receives
an invoice and usually an activity-based breakdown of the fees charged.
BENEFITS NEGATIVES
You get to invoice completed work quickly. As the level of fees will fluctuate monthly,
this could have negative impacts on cash
flow and affect medium to long term
planning.
It gives the client fee transparency. The client has no control of the amount
invoiced so can’t budget accordingly.
It’s clear to everyone what’s being paid for Administering the production and issuing of
monthly invoices takes up time.
15.3 Fee per client or customer
This option is most used in the corporate pension’s world. A fixed fee per head is charged to
cover all the work for each member. Additional fees are also levelled on the employer
depending on the proposition agreement. These are usually invoiced quarterly with a
reconciliation exercise at the end of the year.
BENEFITS NEGATIVES
The client can budget for defined and
expected costs.
As the level of fees will fluctuate monthly,
this could have negative impacts on cash
flow and affect medium to long term
planning.
You can predict your levels of income,
which aids cash flow.
Administering the production and issuing of
monthly invoices takes up time.
This is easy to explain and operate. You may charge too little for the work
involved.
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15.4 Retainers
You agree a yearly fee in advance with the client or employer who pays an amount each
month usually by direct debit. At the end of the year you can compare any income received
to the time charged. If there’s a shortfall, the client makes a balancing payment to cover it.
Any surplus can be offset against the next year’s fees.
BENEFITS NEGATIVES
This is easy to explain and operate, and
clients can budget for defined and expected
costs.
You have to be careful as the retainer may
not cover the work done or the time spent
with the client. If so, consider additional
fees.
You can predict your levels of income,
which aids cash flow. It can also turn
unprofitable clients into profitable clients.
If your retainer is too high, you may be
undercut by a competitor.
Any shortfall can be invoiced at the end of
the year, or any surplus offset against the
next year’s budget. Additional services not
covered by the retainer can be invoiced
separately.
You need to explain to the client what is
covered by the retainer and they have to
understand this.
As you can see there is not one ideal model. You need to decide what’s best for your
business and your clients and potential customers.
Why don’t you try using our Pricing templates to give you an indication of how robust your
existing charging structure and of how you could perhaps improve its profitability for existing
and new clients?
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16.0 Idea 14 – pricing your proposition
16.1 Existing clients
TIME IN HOURS – ACTUAL NUMBER
HOURS
REQUIRED
ADVISER PARAPLANNER PA ADMIN
CLIENT
REPORT
CLIENT VISIT
VALUATION
PROACTIVE
PHONE CALL
REACTIVE
PHONE CALL
QUOTATION
APPLICATION
PROCESSING
TRAVEL
MEETING
ACCOUNT
MANAGEMENT
PROVIDER
RELATIONSHIP
STAFF LIAISON
TOTAL
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16.2 New clients
TIME IN HOURS – ACTUAL NUMBER
HOURS
REQUIRED
ADVISER PARAPLANNER PA ADMIN
INITIAL
MEETING
INITIAL
REPORT
CLIENT VISIT
VALUATION
FACT FIND
TRAVEL
QUOTATION
APPLICATION
PROCESSING
TRAVEL
PRESENTATION
RECOMMENDA
TION
NEW BUSINESS
PROCESSING
PROVIDER
RELATIONSHIP
STAFF LIAISON
TOTAL
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17.0 Action plan tracker
This checklist will help you keep track of who’s doing what and when.
STAGE OWNER DUE DATE PROGRESS/COMMENTS
VISON
COMPANY GOALS
SEGMENTATION
MODEL
MARKET
OPPORTUNITIES
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MARKETING PLAN
FINANCIALS
MEASUREMENT
