Advice practices should take advantage of economies of scale, if they want to meet clients’ changing expectations of value for money services, warns Seaview Consulting.
The business consultancy firm said that in the future advice clients will be looking for a ‘one stop shop’, seeking out practices which can deliver a wide range of services, including investment, risk management, and debt advice, alongside accounting and estate planning services. Seaview’s Directors, Bob Neill and David Fotheringham, warned it would be a challenge for business owners to meet all these needs without building scale.
… much closer attention will be paid to the price that clients pay
“It is inevitable that financial services is moving into an environment in which much closer attention will be paid to the price that clients pay for the services that are delivered,” said Mr Neill.
“If a financial services practice cannot ensure that it can economically deliver those services it will struggle to maintain a sustainable future.”
Mr Neill and Mr Fotheringham drew a parallel with the accounting industry, which underwent a similar transformation during the mid-eighties. According to Seaview, changes to legislation and an increasingly complex taxation environment led accounting clients, particularly business owners, to demand their accounting firm deliver a depth of capability across a range of areas.
This consumer demand gave rise to the emergence of larger accounting practices with more staff, a model which now dominates the accounting market. The need for scale was evident in this drive to deliver the full range of services to clients with a high level of expertise in each advice channel, Seaview’s Directors said.
… the choice will be forced on business owners to adopt this scale push or prepare to compete against it
“It is our view that financial advisory businesses will go the same way and in fact it has already commenced with the emergence of a number of ‘merged’ accounting and financial planning practices delivering their clients a ‘one stop shop’ experience,” said Mr Fotheringham.
“This is only in its formative stages but will gather momentum quickly and the choice will be forced on business owners to adopt this scale push or prepare to compete against it.”
Seaview argued that while there would be little change in the short term, new competitors are likely to emerge in the future, who can offer clients a greater range of services at perhaps a lower cost with the advantage of cohesive delivery.
“That will be the true test of whether a financial services advice business is sustainable,” Mr Fotheringham said.
“Financial services practice owners must consider very carefully today, what they want their business to look like five years out!”