News

Relationship Based Clients are Stickier than You Think.

Client retention is clearly one of the greatest unknowns within any business. Once you have serviced a client, will they come back? How many times do I need to have serviced a client before I can really call them “my client”? This will obviously be different across various industries. People are perhaps less dedicated to the same café or retail shop, but when it comes to professional services, this is a different story. Once you find a provider you are happy with, most are loyal. However, in this world of increasing automation and commoditisation of services, this is a concern increasingly raised by practitioners. “How sticky are our clients or are they becoming less sticky”?

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The Cost of Advice will be Far Outweighed by a Superior Outcome

I tend to have a personal philosophy when it comes to dealing with matters or situations in which I have little or no knowledge or experience. Despite my education, qualifications, experience, general worldly knowledge and business acumen, there will always be areas of life, both in business and personally, that I simply no little or nothing about. So, what are the alternatives? Well, I can either try to know a little about everything and still experience difficulties, or I can engage with others who hold these areas of expertise. It is this latter approach that I generally choose. Why? Because I know I am receiving sound valuable advice from the outset and I am also avoiding the future cost of initially doing the wrong thing in the first instance and then having to pay more to fix up the problem or issue I have caused.

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Lessons to be Learnt from AMP’s Proposed BOLR Valuation Changes

Given the more recent climate impacting upon the financial planning space, I’m by no means surprised to read of AMP’s desired changes within their BOLR valuation methodology, reportedly almost halving the previously recognised multiple. To be honest, I don’t blame them, there is no way 4 times recurring revenue is reflective of current market conditions. I recall back in the day another dealer group would buy back advisers’ books at 3.5 times and then on-sell them to other advisers within their network at 2.5 times, effectively taking a 1 times hit on the deal. However, this underpinned the retention of clients within the group as advisors retired or left the profession. That said, I do appreciate the uproar amongst AMP’s advisers thinking they had a guaranteed buy back price when the time came to depart only to find that has now changed. A no win situation for both parties.

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Balancing Longer Term Succession Planning

Recently we were working with a client who had the potential opportunity to acquire another practice, however the transactional timeframes of the vendor were longer term, over say five years or so. Such scenarios are generally less common within the professions, we more so hear of the practice or practitioner that wants to be sold today and gone tomorrow.

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