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Adviser Workshop: How to identify unnecessary costs

by Jun Merrett on Jul 28, 2011 at 09:33

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.

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5 comments so far. Why not have your say?

Julian Stevens

Jul 28, 2011 at 15:26

One of the best ways to cut costs (massively) is to secure authorisation under a non-UK regulatory jurisdiction.

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Green Eyed Monster

Jul 28, 2011 at 16:10

Do tell Julian.

Who has done what you have suggested?

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Julian Stevens

Jul 28, 2011 at 16:47

Well, I know of one company in the process of doing it right now and, although it's taken them a couple of months to jump through the hoops and over the hurdles (it ain't a cakewalk), it's been pretty plain sailing so far. But, last time I spoke to the principal, they weren't quite there, so it would be inappropriate for me to name them at this stage.

I don't know personally of any other firms who've passported but, via one of our broker consultants, I have heard of several ~ ask around. Or go to the Irish regulator's site and see what firms you can find who are based in the UK.

Also, there's nothing to stop you setting up an offshore-regulated firm in parallel to your present one and then quietly migrating everything across to the new one. You can even do it without having to leave a network.

The FSA has said it plans to go after any firms who passport to avoid the RDR, though it hasn't spelt out how. Once you're out (and back) the FSA has no authorisation to cancel, though it could (and probably would) make life difficult on the Anti-Money Laundering front (for which it would still hold regulatory powers).

It's been mooted that the FSA might seek legislative powers over passporting firms and it might just get them, though its current spat with the TSC will undoubtedly have diminished the willingness of the government to grant the FSA whatever it asks for. Also, a regulator with such powers would (as far as I know) be unique throughout the EU, which might also give the government pause for thought.

My advice is to get QCF Level 4, by one route or another (IFS or AIFA appear to be the most relevant and manageable), and then passport out. The FSA then won't be able to hound you on the grounds of RDR-evasion.

My source tells me his firm's regulatory fees are set to fall by something like 2/5ths.

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Green Eyed Monster

Jul 28, 2011 at 17:01

Thanks Julian,

How will the UK product providers deal with firms not authorised in the UK.

Have any UK product providers -to your knowledge- given 'agencies' to offshore intermediaries?

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Julian Stevens

Jul 28, 2011 at 17:25

If you're EU-legal, then UK providers will readily grant you an agency.

To your second question, the answer is yes (as posted here in the past by at least one other EU-regulated adviser). There's no reason for them not to.

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