HSBC, 'tied' financial advisers and why Independence is best.

HSBC announced this week that they were cutting over 2200 jobs in the UK.  In today's environment it's not a huge surprise that another bank are looking to reduce costs especially where they have admitted they feel they have too many people and HSBC believe that this is primarily in the senior and middle management roles within the business.  HSBC were keen to point out that only a small proportion of the roles they were cutting were "customer facing".

However one important point to note was that 650 (30% of their total UK cuts) of their 'tied' financial advisers (their branch based individuals who can only offer a limited range of products provided by the bank and it's commercial partners) are being cut.  The bank confirmed that this was so that the bank can have 'continued profitability in the face of a changing regulatory landscape'......confused?  Let me help you by translating...the HSBC management doesn't believe that their tied financial advisers can survive after the end of the next year (due to the upcoming changes in the financial services environment which you can read more about here and here).  Interestingly HSBC have decided to keep their independent financial advice arm throughout this process.

I started my career within a bank based environment, and also spent a few years as part of a 'tied' sales force within one of these banks and I've written before about how many of both my interpersonal and technical skills were developed whilst working within this environment.  This was due to the fact that the quality and standard of the training provided were of an incredibly high standard and I'll forever be grateful for this.

However since becoming an independent financial planner around 7 years ago, I look back and wished I'd been in an independent environment from day one and there are a number of reasons why.  In our business, individuals are treated like clients.  In the tied bank environment, individuals are treated like customers.  So, what's the difference?  We work with our clients over the long term to try to improve their long term financial situation...there's no 'quick fix' and we are there to guide our clients along their financial journey on a regular basis.  We work in partnership with out clients to help them.  

In the Bank environment it's all about the 'product'....individuals are customers where the tied financial advisers are targeted primarily to sell a pension, life assurance policy or investment.  I'm ashamed to say that when I worked in this environment my focus wasn't on the client.....it was on the target I needed to achieve!  I'm not making excuses, but I didn't know enough about the independent sector back then to understand there was a better way.

Also the 'sausage factory' (one client out and the next client in) culture the bank environments reinforce mean that you cannot treat individuals like clients as you just don't have the time. So, individuals seeking advice from 'the Bank' are customers (who come into a 'shop' and buy a product) and not clients (who works with a professional adviser over the long term).

In addition to this being independent provides me with an opportunity to review the whole of the market to find the most appropriate arrangement.  Whilst the Banks have had a rough time in the press of late, they still have a big brand and a captive market (their 'customers' who visit the branch) and therefore the limited range of products they provide don't need to be particularly competitive and due to this the products they distribute don't tend to be that attractive (from either a cost or fund performance perspective) when compared to the rest of the market.  This is another reason I believe that independent advice is best.

Last but by no means least, our clients do purchase a 'product' however this product isn't a pension, life assurance or investments.  The 'product' we sell is professional independent financial advice.  This may mean that the client pays us a fee (as they would for another professional service like legal or accountancy advice) and I believe it's something many of the banks have never provided through their restricted advisers and cannot provide effectively especially in the 'new' environment post RDR.

Due to the reasons above, I believe that the banks pulling out of the tied advice environment is a move in the right direction for our profession as clients are now more likely to approach an independent financial adviser and receive more professional advice as a result.  One important point to remember is that with any decision like this there are victims.  On this occasion it's the advisers who will lose their jobs as part of the changes, many I know personally as good people who do try to help their clients as much as the banking culture lets them.  However it will now provide these individuals with the opportunity to change the way they work, develop as professionals and move to an opportunity which will allow them to work the way they want to, ethically and in the interests of their clients long term financial health.

As ever, these are just my opinions and I'm interested to know what you think.  So, what do you think about HSBC removing their restricted sales force?  Do you believe independence is the only route forward, or do you see a place for 'tied' advice?  Do you think there is a clear cultural difference between independent financial advisory practices and the 'tied' environment?

Top 3 Songs of the week....

For today's blog (and as i'm writing this on a Friday) I thought I'd write about something different.  So, for no other reason than the weekend is quickly approaching....I'm going to share with you 3 of the songs which seem to be consistently playing on my Ipod at the moment!

1.  Kings for the Weekend - Missing Andy

A great song from this 5 piece Essex based band who sound like a 21st century version of the likes of Madness and the Specials.  The band formed in Braintree, Essex (the same place as the Prodigy no less!) and the video, in my humble opinion, is fabulous too!

2.  Nothing's real but Love - Rebecca Ferguson

Personally, I think that winning a talent show is more of a curse than a blessing.  I'm therefore glad that Rebecca didn't win but took the time to release an album of true quality, which contained this gem of a song.

3.  A Change is gonna come - Aloe Blacc

Ok, so this one's not on the Ipod...but discovered via Youtube.  A classic Sam Cooke song further enhanced by the super smooth Mr Blacc.

So.....There are my 3 songs of the week.....what's playing on your Ipod at the moment?

Social media, Support and a Twitter thank you

It's not a huge secret that I'm a social media fan.  It gives me an opportunity to share my thoughts, provide (hopefully) useful information, engage with both potential and existing clients, and market my business.  However the interesting thing with "social media experts" (which is a term I'm not too keen on at the best of times) is that they talk about the benefits of promoting your business on-line but don't talk often enough about one of the key advantages of engaging in social media - sharing ideas and expertise.

This week I was deciding what my route was going to be to Chartered status (one of the highest qualification standards a financial planner can achieve).  I decided to reach out to my Twitter connections for some ideas about what might be the most appropriate route.  Within a few minutes I'd received some brilliant ideas from fellow professionals who have completed this journey already on their experiences and the best potential route forward.  Within about half an hour I'd received offers to provide help me along with this.

I've written on this Blog before that financial planners working together benefit everyone including the professionals involved and their clients.  I'd like to add to that, I also firmly believe that the best professionals in any sector also understand that collaboration and not competition is the best route forward.  It's easy to be territorial about your business and your clients in a professional services environment, but I think it's far more powerful to be as open as long as you are ethically, commercially and legally sensible whilst taking this approach.

So....Thank you Twitter for connecting me with other professional people who are supportive and open.  Also, thanks to the professionals in question on this occasion, Martin Bamford, Pete Matthew, Rob Stevenson and Abraham Okusanya for being so helpful.

So, How do you use social media?  Do you believe it just should be a way to promote your business or also a place to exchange ideas?  and do you believe it's important to have an open and collaborative approach to your business, or do you think this is commercially unwise?  As ever, regardless of whether you agree or disagree I always look forward to hear your thoughts....

Quarter one 2012 - how was it for you?

As the dust settles on the first quarter of the year (although we're now one month into quarter 2!), we've found it quite useful within our business to take the time to ask ourselves some fundamental questions to assist us improve how we help our clients, improve our processes and enhance our business for the future.  The questions we ask ourselves are, "What did we do well?", "What do we need to improve?" and "What do we need to change in the next quarter to improve our business?".

So, I'm curious.....How did your first quarter of 2012 go?  What questions do you ask yourself to review your businesses performance?  and what changes have you made to improve your business?  

Trust...and why this change is good for all

Within the financial advice profession there has been an ongoing issue for a number of years.  Due to the behaviour of, in my opinion, a number of unethical advisers, the public has lost trust in financial advisers.  Actually the majority of financial advisers are highly ethical individuals who take the commitment to enhance their clients financial situation incredibly seriously.  However, and apologies for the mixed metaphor, it doesn't take too many "bad apple" financial advisers to tar all the good guys with the same brush.

This loss of trust hasn't benefited anyone.  It's been detrimental for the professional and highly ethical advisers who have had to work harder to overcome this issue and build a relationship of trust with it's clients and It's been detrimental for the public, with less people focussing on the long term and saving for their future financial goals and many not contributing to ensuring they have a sufficient income to live the life in retirement they desire.  However one thing you can be certain of, especially in the profession I have chosen, is change.  In my opinion, any change which works towards ensuring that this trust is being rebuilt is a positive move.

Within financial service there are a number of positive changes which will impact all individuals and businesses who engage the service of a financial adviser.  These changes have been detailed here in this recent document from the FSA.  It's been a change we've talked about with our clients and prospective clients for a while now.  So, how do these changes potentially impact you?

The changes (called within our profession RDR) should provide all clients of financial advisers with a number of clear benefits.  Firstly clarity.  When the changes occur (from the 31st December 2012) commission on investment and pension products will no longer exist.  Let's be clear, previously clients of financial advisers regardless of whether they paid via a fee or commission ALWAYS paid for the advice.  If a client paid via commission then, generally speaking, the charges of the product taken we're higher than if there was no commission paid to the adviser.  

There was a perception from many clients that this advice was "free" as it was paid for by the product provider paying the adviser a commission, however this was incorrect.  The changes happening should work towards clarifying this issue and clear the muddy waters of how advice is paid for and that's got to be a good thing for both the professional adviser and you as the client.

The second benefit is expertise.  The minimum qualifications to become a financial adviser have increased.  This means far more qualified advisers who are more likely to have the technical expertise to help you both now and in the long term.  The commitment for advisers to continue to learn and develop has also increased and this benefits you as it means that your adviser needs to make a clear commitment that they continue to understand the changes in our business which may impact you as a client.  

Whilst the majority of financial advisers have either achieved these standards or are on track to, there is a significant minority of financial advisers who won't.  So, how do you know you are dealing with an adviser who is ready for these changes?  The answer is simple, before you next take advice with a financial planner understand the upcoming changes and ask more questions!  Take a look at the FSA Factsheet, print this out and next time you are meeting with your existing financial adviser (or looking for a new adviser) ensure that that you ask the right questions to confirm they are ready for these changes.

How the Zoo reminded me of an important lesson in business

The Easter bank holiday for many of us gives us the first opportunity of the year to relax and recharge our batteries over the long weekend.  Whilst for many of you this may have meant copious amounts of chocolate and TV, for me and my family it meant a relaxing long weekend away.  As Sophie is only 4 months old we decided to stay in the UK, and as none of us have visited the north west of England (and the fact that my older daughter, Charlotte is a huge Beatles fan) we decided that Liverpool would be our destination of choice.  A great weekend was had by all, and whilst I won't go into the details of our trip (apart from saying that a visit to the cavern club is a must for any music fan), a trip to the zoo reminded me of an important lesson I've learned whilst working on and in my business...

On bank holiday Monday we decided to leave Liverpool city centre to visit Chester Zoo.  When we arrived the rain had already started and we tracked from the car park to the entrance with Cassie (with Sophie in the buggy) and I avoiding puddles and Charlotte managing to find and jump in every single one!  An hour into our visit the rain was still coming down and we were still feeling pretty miserable.  This was due to being quite wet, but mainly because the majority of the animals we're being more sensible than us and remained hidden away from the rain.

We stopped for a break to dry off and took some time to decide on whether to continue our trek around the zoo, or to call it a day and head off home.  We decided to continue around the zoo, and even though the rain continued to come down, we had a fantastic time! Not only had the animals decided to come out into the rain we explored more of the zoo and found some fantastic gems we would have missed if we would have went home after the hour (including an animated dinosaur exhibition, the chimp enclosure and an amazing butterfly house).

By now you may be thinking, "thanks for your insight into your Easter break Chris, but I'm busy....so what's your point?!".  We could have easily given up after our first hour at the zoo and decided to back to the hotel...it would have been the more comfortable option....but although we didn't know it at the time, we would have been missing out on some great experiences.  In most of our businesses it is sometimes easier to give up and take the easier option (go and work for someone else)...but having the determination to persevere in your business (as long as you have been realistic about your businesses prospects) more often than not pay off in the longer term.

Whilst I'm fully aware of this, the visit to the Zoo was a nice reminder of how important this determination in both my life and business continues to be.  As ever, this Blog is just a collection of my thoughts and I'm always happy to hear your opinion.  So, how important is determination in your business?  When have you persevered when it would have been easier not to?  and can determination sometimes be counter productive and sometimes you should sometimes give up on a project when blind determination pushes you forward?  So, what do you think?

Start ups, relationships and knowledge

Written for the GAAP web Blog

According to recent analysis by company formations firm Duport, there has been a record number of accountancy and bookkeeping start-up business in March 2012.  

The research also indicates that more individuals are moving away from a corporate environment and seting up their own businesses, especially in the financial services sector. Having have set up and continuing to run a financial services business, I wanted to share with you what I've learned over the past few years about setting up and running my firm but lessons that also apply to every accountancy professional.

1.  Focus on building relationships and not "winning" clients

In my experience I've found that the value in taking the time to build long term relationships with both prospective clients and a small number of key introducer's has been just as valuable as going out and 'pitching' to prospective clients about what I can offer them when we first meet. I've been approached numerous times at networking events, swapped  business cards, had a quick chat with the business owner in question and then receive a follow up email explaining what the business does and the standard 'if our services will be useful to someone you know, please recommend us'. Based on a 5 minute conversation and a 'follow up' email I'm not and never will be prepared to take this risk.

I believe the 'scattergun' approach to winning clients tends to be counter productive. After all, would you trust someone with your business finances who wasn't prepared to take the time to build a relationship with you before asking for your business...I know I wouldn't.  Also, whilst I believe that this 'relationship based' approach is fundamental to long term sustainable business success, initially when you are looking for your first few clients it's also quite scary.  But persevere with this approach, focus on building deep relationships as opposed to a wide contacts book, and take the time to meet less people but the right people, and you'll find it will reap longer term sustainable awards in the long term.

2.  Give (some) knowledge away for free

In any form of financial services environment, be it accountancy, bookkeeping or financial planning we shouldn't lose sight of the service we provide. I believe it's important not to forget the fact that business owners can complete their bookkeeping or accounts (or even financial planning) themselves.

However most  'outsource' this service for two fundamental reasons, firstly most business owners feel they would rather focus their time on what they are good at and secondly, and in my opinion most importantly, they don't have the processes and expertise in place to complete the work they require us to do.  Therefore business owners want access to our 'intellectual capital' to make their business (or personal) finances run more smoothly.

However, how do you evidence that you have the expertise to manage their affairs.  For our business it means providing useful 'tips' which may help this prospective client, and always provide these useful pointers free and without obligation.  However I also believe that you need to be cautious about how much information you provide for free.  After all, if you are a service business where an important aspect of this service is access to your knowledge you need to ensure that there is a clear line between both the advice you'll provide for free and the advice you will charge for.

3.    Be Visible

As already mentioned there are a growing number of companies out there providing accountancy and bookeeping services to businesses.  So, how do you stand out from the crowd and ensure that when a prospective client needs your services they pick up the phone to you.  Whilst advertising, networking and the more traditional marketing techniques have their place in the market, I believe the internet has and will continue to revolutionise the way SME's do business.   

As a business we actively promote our service online.  We steer clear of direct advertising, but promote ourselves by sharing knowledge using online tools like Linkedin and Twitter. However, you need to ensure that the content you provide is relevant to your audience, consistent and of high quality.  This will build your reputation and in time will help position you as the "go-to" professional in your business.  Again, this approach takes time but I believe pays dividends in the long term.  Being perceived as an expert in your field provides a range of opportunities, credibility with professional connections and the opportunity to talk about you and your business to a wider audience

The Google art project - what do you think?

Today, as usual, I opened my search engine of choice, and probably the same one as most of you...Google.  Whilst I'm normally pleasantly surprised on the new additions I find on Google's main page, this one pleased me even more than usual.

The reason for my delight was that Google are working in conjunction with many of the top art galleries in the world (including the Musee Dorsey in Paris, the Tate Britain in London and The Metropolitan museum of art in New York) to display their collections online.

The new application (aptly titled the Google Art Project) has a number of really nice features, including the ability to take a virtual stroll (in a street view style) around your gallery of choice and the ability to search for pieces by artist, museum or geographically.

So, I'm suitably impressed....what do you think?

Balance and the most important 'job' in my life

In my life, and it's likely that it's similar in your life, I've got a number of different roles and responsibilities.....Business Owner, Financial Planner, School Governor and Husband.  Whilst I take all the responsibilities with these roles incredibly seriously, there's one which stands out.  It's the one I learn the most from and receive both the most enjoyment and satisfaction, and if you either know me (or even if you've met me once!) the one I talk about the most.  It also stands head and shoulders above all others as being the most important role in my life, and that's being a dad.  However, I sometimes find that trying to get the balance right between the time I spend building a business, looking after my clients and ensuring I'm living up to my out of work responsibilities means that I'm usually pretty busy....and sometimes the most important 'job' in my life gets far less attention than it deserves.

However, life is a lot better now than it once was. Running a business provides one benefit which I underestimated when entering into it, and that's more control of my own time.  Since I started my business I've found that if I need to take an afternoon off to go to a school assembly, sports day or nativity I'm normally able to.  Whilst the 'day job' still needs to be done, I find that I have far more flexibility to do this than I was able to in my days working within a more corporate environment.  When Charlotte was younger circumstances meant that I had to be in the office consistently, often working long days and having to bring work home with me to complete.  While Charlotte is a lovely little girl and hasn't suffered from not seeing me as much when she was younger, I still feel slightly guilty about not being around as much during her formative years.  As Sophie now grows up I'm going to try not to make the same mistakes. 

Am I going to ever get the right balance, probably not....but I find that as I understand what I missed with Charlotte (and not wanting to make the same errors as Sophie grows up) I tend to 'waste' less time on issues that don't matter as much so I can spend more meaningful time with my girls.  So...I'm interested to hear your thoughts.  How do you make sure you're spending enough time with the family?  How do you get the right mix between work and life?  What are your 'top tips' to ensure your work / life balance is right?  

Ipad magic!

I came across a really interesting video yesterday.  As a fan of gadgets and magic (yes, I am a nerd!)....I really enjoyed this.  Take a look and tell me what you think...

The petrol crisis and emotion v logic....

Let's be clear...the recent petrol crisis wasn't a crisis at all.  It was an emotional response to a couple of news articles for events which might potentially happen. People rushed to the petrol pumps in droves sometimes waiting hours to top up their vehicles, based on a potential strike which never happened and fuelled (excuse the  pun - couldn't resist!) by some frankly shocking advice from certain government ministers.  The press who promoted the story didn't help much either and made the it worse.

So, a crisis which was never a crisis made worse by bad advice and certain members of the press, but ultimately guided by one thing - consumer emotion.  Don't get me wrong, I think queuing up for hours for petrol was an understandable action to take, but one solely guided by emotion (the 'fear factor' of not having enough fuel in the car) as opposed to looking at the  facts and making a decision accordingly.  I'm also not suggesting you shouldn't be emotional....sometimes it can be a fantastic motivator, however if you act on emotion alone it's unlikely you'll make the right decisions in the long term.

As an individual, emotion is a great motivator.  In my personal life, I love spending time with my family, get excited when Charlotte comes home and tells me something new she's learned and at the moment when Sophie smiles, laughs and gargles!  In my business, I get excited about new ideas, concepts I want to try and the passion I have to push my business forward. However I've made mistakes, thankfully ones I've learnt a lot from, and when I look back at these errors in judgement I think at least part of the issue is not tempering the drive and passion (emotion) with a more methodical approach (logic).  It's something I try to apply more rigorously now when running my business.

Interestingly, I've spent some time today reading about how behaviour impacts peoples spending habits and attitude to investment.  Whilst I don't profess to be an expert (yet!), the interesting point raised is that how people should invest isn't always how people choose to invest.  Whilst I've learned within my business that the emotional aspect should always be tempered with a more methodical approach, it's something I've advocated with my clients in relation to investing for their financial futures for years.

For our clients it's about listening to what their plans are in the future and why they feel passionate about these future goals, understanding their previous experience and why they feel certain ways about risk (both gain and loss).  Once we've got a understand how they are feeling (and the reasons behind these feelings), it's time to temper this emotion with logic and build a longer term financial plan based on a logical and methodical approach.  This doesn't mean we ignore our client emotions, it just means making sure emotions don't cloud our judgement when we provide advice.

So, next time you are making an decision about your financial future, make sure you're aware of your emotions, but don't let you're heart rule your head.  Instead of chasing the "next big thing" or looking to invest in "exciting new investment opportunities", take a more methodical and scientific approach to your investment choices, and the odds are you'll "feel" better about it in the long run.


Thanks to www.behaviorgap.com for use of the really interesting resource,  and thanks to @Theparaplanner for pointing me in the right direction.