In December 2015 Centurion ran an Industry Snapshot survey that many of you participated in. We asked a number of questions about the impact of existing and pending reforms as well as your projections for revenues and growth in 2016. What became apparent is a disconnect between the potential ramifications of reforms on practices and growth projections for 2016. In many cases there are healthy growth targets in place yet there are limited, or no, strategies in place to drive growth and counter the impacts of reforms on generating revenue.
The numbers tell the story:
- In light of regulatory change, 53 percent of respondents expect generating revenue to be harder in 2016 (7 percent ‘did not know’ and 40 percent said regulatory change would not impact revenues)
- However, when asked about revenue and growth projections for 2016, a significant proportion of respondents – in fact 75 percent – expect revenues to grow in 2016. And within that 75 percent, 42 percent expect revenues to increase by between 10 and 50 percent.
- So how will practices grow when it’s going to be harder to generate revenue? Well, when we asked about changes to fuel growth, 38 percent of respondents were not planning to make any changes to their business. Which begs the question, how will revenue growth targets be met in a challenging environment without strategies to diversify, grow or evolve?
- Of the respondents who plan to make changes to their business, the most common response was 22 percent looking to partner with other providers to expand capabilities to include tax advice, accounting advice and/or mortgage and debt advice. Additionally, 12 percent are looking to expand these capabilities in-house. It appears a diversification strategy is key and will continue to gain momentum into 2016 and beyond.
In our October 2015 Blog we discussed the financial advice practice of the future and in essence what we believe is that financial advice in all forms (Tax, Accounting, Finance, Financial Planning, Investment, Risk etc.) will be delivered from the one office to clients, the data above seems to be supporting this view.
Big picture the survey results say 75% of practices expect to grow, 31% expect to grow between 10 and 50 percent however 38% will not be making any changes to their business. There seems to be a disconnect between the growth objectives of many and the action required to meet those objectives.
The difference is likely to be business planning and plan execution. As an observation it has been documented by other consulting specialists that only about 28% of the industry undertake and execute against business plans. Unless you are coming off a very low base double digit growth for an advice business is not easy without a well thought through and forecasted plan and then the actions the plans require to be implemented.
There were a number of other responses including acquisitions, selling practices, growing number of advisers and so forth. I will evaluate these, as well as the differences between small and mid-sized practices as well as larger businesses in future blogs.
Chris Wrightson. Founder and CEO at Centurion Market Makers, the industry experts in the sale, acquisition and management of financial planning firms. If you’re planning on selling your firm in 2017, we’d love you to call us for a confidential discussion, or continue browsing our website for more tips, tools and info on the steps to take when buying or selling your financial planning firm.
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