I've been thinking a lot about trust the past few weeks. But first, a story.
A few years ago, back when the lang cat was more of a kitten I guess, we put together an informal list of members of the advice community. A handful of fine individuals that we had a really good relationship with for whatever reason. Chiefly, it was folk we could lift the phone to and pester every now and again and vice versa. In truth, these good people acted as a really important filter between some of the marketing bumf that we all receive from product providers, platforms and asset managers. A translation from marketing spiel to the truth if you like. In head office, this became known as 'the lang cat friendly adviser list'.
Over time, that list of people grew. I recall quite vividly being chuffed when that list reached 100. (We all like round numbers!) Soon, we launched our online platform directory and started asking users if they'd mind joining the lang cat research panel. We also started asking everyone we met at conferences, seminars, webinars, you name it. "Would you like to join the lang cat advice panel?" became one of our go-to conversation pieces.
Fast forward to 2020 and I'm thrilled (and mildly overwhelmed) in equal measure to say that we now have over 1,200 members of the advice profession who have given us permission to contact them on a regular basis and ask them stuff. I'm also dead chuffed to say that most of the original members of that first friendly adviser list are still here with us.
Which brings me back to that original point about trust. Members of the advice profession entrust us with their opinions & data, safe in the knowledge that we will act with integrity. That why as the list has grown, we've had to grow up with it. We're now members of the market research society (MRS) and we carry out our research with its code of conduct at the forefront of our minds.
Back to the point, Steve
Oh yes, so right before thinking about what to write for the good people at Synaptic this time round, I was putting together a big data pack of insight gathered from our various research exercises conducted recently. A big chunk of the insight we've managed to gather simply wouldn't have been possible had we not built up those relationships over time. At least I don't think so anyway. Consider the following questions:
- Tell us your fee structure please.
- How do you attract new clients?
- Is your experience of Covid-19 going to change the way you work?
Let's look at each in turn.
In our 2019/20 Omnibus study, State of the Adviser Nation, we asked 404 members of the advice profession to share their fee structure with us. Often a point of fierce sector debate, we were humbled to receive a large stack of insight in return when the easier thing would have been to skip this question with a quick "none of your business Mr or Mrs Cat."
You can see from the chart below that an interesting pattern emerges. Straightforward %-based charging still dominates ongoing firm revenue but a potentially larger-than-you-think portion state that they have a mixed or hybrid approach. From analysing individual responses over time, we're starting to see an emerging trend of firms moving to a combination of fixed and percentage-based charging, often with minimum or maximus rates in place. Definitely one to keep an eye on, particularly against the seemingly perpetual regulatory focus on value for money.
Back in February, we were commissioned to conduct an in-depth exercise looking at the growth of the advice sector. As part of the project, we asked our advice panel some rather intrusive questions about how they targeted new clients and to what extent their businesses were growing.
My biggest takeaway from this is the stat that around 80% of client growth (as a pure mean average from respondents) was attributed to a combination of existing client and family referrals and partnerships with specific professions.
Set against the backdrop of all the hellish uncertainty we're living in right now, that painted an extremely reassuring picture to me insomuch that (1) existing client satisfaction is clearly underpinning new referrals and (2) firms seem well protected against the 'footfall' volatility of other sectors.
Speaking of which…
Back in the height of lockdown, we asked our adviser panel a range of questions relating to how it had affected their respective businesses and their view of the future. Perhaps the biggest question of all was how they were feeling as they (hopefully!) approached the end of lockdown.
You can see here that over a third of respondents indicated they're going to fundamentally change the way they work, or at least make some big changes. Looking at the supporting verbatim comments and most stated a desire for a better work/life balance. I reckon that's understandable. We all have busy lives and an 'always on' culture can be difficult to keep up. Lockdown has given many of us time to re-assess our priorities.
So, there we have it. Walk up to any advice professional cold and ask them what their fee structure is, how they attract new clients and what they're going to do with their business once the pandemic ends and see how you get on. I bet the depth of response will hinge on your relationship with that individual. We're blessed to have built up so many of those over time.
I'll be back next quarter with some fresh insight. You'll have to trust me on that.