New Model Adviser - For Professional Investors

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Adviser Workshop: How to put profits to good use

Adviser Workshop: How to put profits to good use

Stephen Girling

Managing director, SG Wealth Management

We have always held the view that we need to be running the business with a reinvestment philosophy, because that is the way you build value.

Keep it in the family

The starting point is we always keep most profits in the company. We have always had a good reserve should opportunities arise. Five years ago that was to purchase another business, but there are also opportunities, whether that is to do with technology or a need to upgrade infrastructure.

We always keep a contingency fund in the business, and that is quite different from some firms, which take out all but the last few pennies to live their lifestyle.

Decipher digital

The latest discussions we had were to do with the digital future. It is not just having enough IT to support your advice. There is an expectation that a lot of things will be available to clients in the form of dashboards or other devices. There are other things on the periphery, and it is about knowing what is going to be a gimmick and what is going to appeal to clients.

If we can offer clients improved service we know we will have sticky clients, and that is going to improve the value of the business. We recently upgraded our servers, and that has allowed us to access data more efficiently, which can in turn give us a lot more useful information. So it is very much about having an eye on what the return is going to be on any investment.

Top tip: Improve your proposition to keep clients happy.

James Wetherall

Director, Wetherall’s

We are a young business, only three years in. In the first year we invested profits to create a good benefits structure for staff, putting in place pensions, private healthcare and bonuses. The second year was about building up processes and the quality of what we were doing. We started investing more in software, brought analytics in house and changed some of our research tools.

Graduate trainees

Throughout we have been supporting a graduate trainee, Josh Underwood, with his studies. This year is a big year because we will start marketing the business to attract new clients for Josh. As Josh gets qualified I will be investing in another trainee to grow the business organically.

Transition to lifestyle planning

We have also brought cashflow modelling software in house to start to transition the business to a more lifestyle financial planning approach. I think that is where the future of our profession lies, and where the biggest opportunities are. So we are reinvesting time and financial resources into that at the moment. The focus becomes the cashflow planning and the lifetime cashflow planning for clients; it revolutionises the client relationships and makes for some really exciting discussions.

I am always very prudent and keep a large cash balance in the business so we have security and options if opportunities come along.

Top tip: Focus on your speciality. For us that is cashflow modelling.

What Twitter thinks

Martin Bamford, managing director, Informed Choice

Profits here go to investment in people, systems, marketing – also to shareholders as a reward for capital deployed!

Colin Low, managing director, Kingsfleet Wealth

Good question. 1. Invest in growth but also 2. Invest in efficiency.

David Penney, director, Penney Ruddy & Winter

We have a new joiner starting in a few weeks. IT upgrades when we need them. IT costs tend to be monthly subscriptions and hardware.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Comment & analysis

Twitter