Make time for change
Following the release of the latest FSA feedback papers covering the RDR and Capital Adequacy (08/06 and 08/20), I have good news, and I have bad news.
The good news is that we now know what the FSA are expecting that the Advisory landscape to look like, and, critically, we actually DO know what ‘Good’ looks like within that landscape.
The bad news is we have to transition to that model at a time when the economic climate is ‘unsupportive’, to say the least.
There will be other times and places to comment on the content and flavour of the FSA proposals. Right now, we need to think how we are going to ensure that we have thriving, successful businesses in the future.
And something new clearly needs to happen. According to a recent poll on IFAonline.co.uk, over 82% of respondents believe they must make changes to their business model to become RDR compliant, with over 34% believing that the changes required are substantial.
This will all take time. Time to think at least 5 years ahead. Time to research the options available. Time to work ON the business, not just IN the business. Time to implement these thought through solutions in a commercial, pragmatic way.
In short, we need to ‘Make time for Change’.
To do this, we need to start at the beginning. Where are firms spending this time now? What tasks can be – and should be –
reviewed in order to reduce the time spent on them, so that saved time can then be spent in other areas.
Rather than guess, Perception Support have got together with Capita to survey a sample of around 10,000 firms and look at where
time is actually being spent now. Thank you
to those that took time to respond.
The results are both interesting and concerning.
The results showed that 93% of Advisers spend less than 20 hours per week with clients. Put another way, assuming all our Advisers actually work a 40 hour week, this means that most Advisers spend between 15 and 20% of their time with clients. This is the same figure we keep seeing from other surveys, including a similar one in 2003. So nothing has really changed in the last 5 years!
Even when you combine this ‘Face to Face’ total with ‘Office based’ billable time, you are looking at over 60% of Advisers spending less than 10% of their time on Fee generating work! This is clearly a massive drag on the business.
It also misses the point in terms of our added value. Clients value their relationship with us. That means contact, which is usually face to face. We keep getting told, time after time, that clients do not value the time we spend on research and paperwork, but that’s where our Advisers effort is currently being spent.
So where is this time going?
The big thieves of Non-Billable time are the usual suspects. Report writing. Asset Allocation and Fund Research. Obtaining valuations.
I have a couple of comments here:
The first is that it is critical to remember that this survey was of Adviser time. What on earth are these advisers doing spending at least 30 hours a week each on these activities? If we assume £50 per hour as the cost of an Adviser, this is costing firms something like
£1,500 per week per Adviser.
There are two separate parts to look at here. The first is – are we using appropriate technology to streamline these process? Are you sure? The proper use of technology is critical here, as well as systemising tasks centrally whenever possible, rather than each Adviser simply ‘doing their own thing’.
The second question is, is the right person in the practice actually doing this work? Paraplanners, Assistants and just good old fashioned proper Administration support can cut this ‘wasted’ time dramatically.
It’s all very well knowing where we are, but it’s really important to know where we are going, and have a route map to get to our chosen destination. That is why this research will be followed up by Seminars and Workshops that will focus in on real, practical solutions that we know work.
The simple fact is that most of the firms surveyed actually do know where they should be spending their time. When we asked firms where they would spend an additional 5 hours per week, 2 out of 3 respondents told us they would spend the extra time in gaining new clients, and working with existing clients. That’s absolutely the right things to do. If we protect and grow the client base, the rest of the business is so much easier to manage.
But when you look at how much time is currently spent on Marketing and gaining new clients, 84% of Advisers spent less than 10 hours per week in this critical area, and only 1% of respondents spend over 20 hours per week. If you accept the old saying that ‘Getting and keeping clients is the only profitable activity, everything else is cost’, then it is clear that the ‘Cost’ items are driving out the ‘Profit’ items for many firms.
But it’s a chicken and egg situation. We know that we are spending time on things that have lower added value. We know where we should be spending our time. But getting from A to B is not quite as easy!
And that’s why we are ‘Making Time for change’.
Where are the easy wins? The 5 or even 10 hours a week that can be saved by making the business slicker and more efficient? We can then use that time to create the changes in our business that will ensure survival. And then we can address the creation and realisation of long term value in our firms.
This must initially involve a focus on using proven technology to strip out wasted time, before moving on to look at more profound, added value changes.
Now is a good time of the year to make resolutions. Can I suggest that we make 2009 the year that we stopped talking about change, and really made it happen?