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Adviser Workshop: How to identify unnecessary costs

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Adviser Workshop: How to identify unnecessary costs

Andy Jervis (pictured), Dante Peters and Martin Strutt discuss various methods of cutting unnecessary business costs.

Andy Jervis

Director, Chesterton House Financial Planning 

Our productivity took a big step forward several years ago when we started recording time spent on clients’ affairs. We were shocked to find how much time, and therefore cost, was being spent in preparing and holding regular review meetings.

One of our primary concerns was that different financial planners were happy to create their own little sub-systems around our process, meaning that we were not only continually reinventing the wheel, but also delivering wheels in many different shapes. This issue has come to the fore over the past two years as we have assimilated two other practices into our business.

Trying to get experienced, headstrong and independently minded planners to agree on common processes can be worse than pulling teeth, but we have seen a number of efficiency gains as we have managed to hammer out processes on which all of our team can agree. 

Being more time efficient

Perhaps the most significant issue that arose from our analysis of recorded time was the amount of time and effort being put into one-off transactions or queries that arose in between our normal client meetings. Rather than seeking to respond to client queries immediately, our starting position is now to ask whether this is something that can be put on the next meeting agenda, the date of which has typically already been agreed. Obviously there are some things that cannot wait for attention, but it is surprising how few these are if you stop to ask the question.

The key is to be clear about client expectations and to explain the consequences of actions. Over time, clients can be trained to work in a way that is better for them and significantly more time efficient.

Dante Peters

Director, Magus Wealth Management  

We have always used technology as much as possible as a way of driving down costs.

We have done a cost saving exercise in the past, and the result was that we now have a remotely hosted server. We used to have three servers in our office, but the expense added up. We had one server for one function and one for another.

These servers also took up extra square footage we needed to buy for our office when we did not have to. Now the data is remotely housed. We do not have to worry about hiring IT engineers now either.

The hosting cost is £100 a month per user, and it is done by hiring a rack at a business in Canary Wharf. The costs make more sense for a smaller firm such as ours, which has 10 people. If we had more than 50 employees, for example, then remote hosting would become less cost-efficient because we would have to keep increasing the servers. Smaller firms also gain the disaster recovery capability of a larger company. 

Workstation sharing

Another cost-saving trick is to be clever about software licences. You do not need to have a user licence for every staff member if they are not always in at the same time or using the same software at the same time. I have eight staff and most of them are only here some of the time.

We use shared desktops, meaning we can work with others both inside and outside the office quickly. We also use Skype, which is free, for all our communications, rather than a telephone.

Martin Strutt

Managing director, Collingbourne Wealth Management 

We share ideas, investment strategies and marketing literature with other advisers. We pool ideas, so I would not call it simply a cost-saving exercise. What it means is not having to put as much time and effort into finding information and research, or not paying an agency for such information when it can be obtained from other advisers.

Working as the sole IFA at a firm can be a lonely business, so forming these pools helps psychologically as well as financially. In isolation, it is harder to get an idea of what works well and what does not.

The sorts of things I spend money on are technology, data services and research suppliers. Ideally I would like all of these things to be useful, but that is not always the case.

Over time you accumulate subscriptions to various companies. I had around 10 after a year or two of running the firm, but you need to make sure they are still useful to your business. It is the nature of businesses to change, so make sure you are not paying for anything you do not need any more.

Just because you see yourself as a new model adviser, do not just button yourself down. You need to constantly review. 

Clear objectives

If you want to start sharing resources, you have to be clear about what your objectives are and then only work in terms of having this common objective. Otherwise it will not work.

An example of where I have partnered with a business that is highly aligned to my own is my paraplanner. I share a paraplanner with another firm, but only because we share the same basic proposition. The paraplanner is based in my office, but using technology they are able to switch seamlessly between my clients and the other firm’s clients, while preserving confidentiality. The other firm is hundreds of miles away, but we each pay half the paraplanner’s salary.

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