Cost cuts: Five ways to streamline your business

With markets and regulators putting fresh pressure on firms, Professional Adviser asked advisers how to run a tight ship without compromising revenues.

Guess how long it’s been since the most recent market crash? If we take Lehman Brothers’ bankruptcy as the official start – if not the only cause of – the crunch, it has been a staggering 1,150-odd days. That’s more than three years of consumer anxiety and doubts about the reliability of the financial services sector.

This nervousness has impacted financial advice business, many of which have been forced to look for cheaper alternatives to standard business practice to keep the business healthy. Here are five ways some have done just that...

1. Back office, slack office

With some back-office systems costing upward of £100 per month, small advisory firms have looked at more creative ways to deal with their administration. Daniel Cawley, an IFA at 121 Financial Services, said a combination of other tools is “a no-brainer”. His network provides risk profiling software; he pays £5 per month for cloud storage; and Microsoft Business Contact Manager charges the firm £90 for three licences.

2. Seen you before

Expenses need to be divided in to two categories, says consultant Steve Billingham: nice to have, and need to have. “If the situation is particularly bad, you could put an immediate freeze on the first one”, he says. “Look at travel costs, and think about conferences you go to. Are they critical? A lot of advisers have become professional conference attendees – it’s the same faces every time. Understand your reasons for going.”

3. Phantom business

Getting rid of problem clients is “really scary”, admits Brett Davidson at FP Advance. But it might be better to think of the problem in a different way. “The ones where you have less information than you could find in the phone book – that’s not a client at all,” he says. “No-one wants to get rid of staff – but perhaps don’t recruit that junior adviser for the weaker clients.”

4. Sit back, relax

Holding client meetings via Skype is an instant way to cut down on travel costs for both parties, according to consultant and former IFA Bridget Greenwood. Failing that, make your clients come to you. “Cost savings aren’t just in travel costs – which seem to rise practically daily – but also in time,” said Cawley. “The clients also benefit as we have everything we need to hand – printers, scanners, an internet connection.”

5. Strength in numbers

“The old-fashioned approach that only one person can look after a client is not the way to go,” said threesixty consultant Phil Billingham, who argued advisers needed to be more active delegating to paraplanners and administrators. “Clients should be of the practice, not the adviser,” he said. People need to know they are dealing with a lead adviser – but they also understand there are other people who can also help them, he added.