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Adviser Workshop: How to break into corporate advice

Adviser Workshop: How to break into corporate advice

Robert Forbes (pictured), Keith Owen and Bob Woods share their experience of offering coroporate advice, which can be labour intensive but profitable.

Robert Forbes

Independent financial planner, Plutus Wealth Management

The corporate offering should be a profitable area of business in its own right and not a loss leader, used simply to gain access to company directors and senior management for your core private client business.

The cost of running a corporate scheme can be significant and a well thought out service proposition is required. It is important to understand just how labour intensive running these schemes can be.

While it is possible to run a scheme by devoting limited resources, that will inevitably end in a tarnished reputation that can pollute the private client offering.

A la carte charging

Like many corporate advisers, we run a clear menu-based fee structure for corporate business with the company decision makers understanding what they are getting and what they are not.

We spent a lot of time ensuring our service-led proposition was not diluted by corporate business as we did not want to have a proposition that was of a lesser quality than the service levels offered to private clients.

However, many scheme members do not want to have full financial advice and therefore do not require our full service. So we found ourselves in a situation where our proactive service was not required by most corporate members. The only solution was to clearly define the different levels of service and provide the decision maker with the choice as to which route to go down.

In terms of winning clients, it is fairly easy; either the schemes are expensive and have not been looked at for ages, or the ongoing service is poor. Often there is a perfect storm where schemes are expensive (which many directors do not care much about) and the value added by the IFA is unclear (which directors definitely do care about).

There is much business to be won by new model advisers, especially as firms wake up to the impact of auto-enrolment.

Keith Owen

Chartered financial planner, Cathedral Financial Management

We do not go out to attract corporate business. We have 18 corporate clients, and many of those I have acquired over the 44 years I have been in the profession. If we are doing a job with one corporate client they share their experience with other firms. We try and do a good job and hopefully succeed, and business tends to flow from that.

There are two sides to corporate advice: the employers and the employees. When corporate clients take on new staff, we have a face-to-face or telephone conversation with the new member and, following on from that, offer them our services.

Because we are in the West Country, many employees are not highly paid, so there is limited scope for full financial planning. We ensure they have some sort of basic provision and provide a full pension service. If we offer them extra services, they invariably decline.

Providing a basic service

What we are dealing with is the more basic end of corporate advice. You do not have to know everything about corporate business to provide the sort of service the clients we are dealing with require.

With corporate finances stretched, many employers are looking to provide only a basic scheme for their staff – if dealing with high-net-worth executives from a FTSE 100 company it would be different.

Any firm looking to move into corporate advice must be organised. It must have efficient back-office staff and systems as in most cases it is not highly profitable business. If you are not geared up to that, avoid the market because you are not going to make any money.

Bob Woods

Executive chairman, Mattioli Woods

Employee benefits consultancy requires a different mindset from that of private client advising. Employee benefits consultants are able to advise on a full range of benefits and need to have more rounded and technical knowledge, not only of pensions but of the auxiliary benefits provided to employees.

They also need to be aware of contractual issues and legalities regarding certain benefits, as well as the tax consequences and liabilities of falling foul of requirements.

An employee benefits consultancy will be able to work out most technical pensions calculations, and will be able to deal with both the historical pensions structures as well as explaining how auto-enrolment will affect an existing client’s scheme.

They may, on one day, be advising on the intricacies of the latest finance act and how it affects high-net-worth clients, and the next day be dealing with the interaction of small pensions pots with pension credits.

A good understanding of contract or trust law and knowing when legal advice is required is crucial, as is a solid grasp of actuarial practices and calculations.

Communication is important

How you communicate an employee benefits package will dictate how successful it is. Communication has to be factual and accurate, but also provided in an understandable and interesting way.

Equally important is the media used. Having a web-based communication process may not suit a client where internet facilities are not readily available, while member presentations will not work if employees are regularly out of the office.

Installing the scheme will often impact most on the human resources or accounts department, as they will be responsible for liaising with staff, as well as the deduction and often the submission of contributions.

It is also important to correctly ascertain the ‘time cost’ that the implementation and the management of an employee benefits package will have on the employer.

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