The holy grail of independence and autonomy has always been difficult to achieve for financial advice practices aligned to the large vertically-integrated institutions.
The path to freedom and sustainable growth appears more straightforward for self-licensed practices.
For example, when it comes to establishing and maintaining fruitful referral relationships – the lifeblood of thriving, profitable businesses – independence is of upmost importance.
Centres of influence (COIs), be they accountants, solicitors or other local businesses, are generally distrusting of the banks and institutions, and prefer to deal with privately-owned AFSLs.
Rightly or wrongly, self-licensed firms are perceived by many COIs to be more professional and less conflicted.
As such, self-licensed practices with a strong, unblemished brand are in pole position for referral contracts.
But while ownership is an important factor in this area, it’s not the only success factor.
The 2018 Macquarie Accounting and Financial Services Benchmarking Report^ found that self-licensed advice firms were amongst the top performers across a range of factors due largely to “a desire to drive their own strategic agenda and more clearly differentiate their client proposition”.
According to the report, the nation’s best firms are better at customising and differentiating their advice offering; segmenting their client base and understanding the specific needs of each cohort; investing in technology; recruiting and retaining quality staff; and more willing to take calculated risks to grow.
Interestingly, when it comes to succession, the best firms have a structured succession plan, with an internal buy-sell arrangement being the most popular option by far.
All this reflects the entrepreneurial spirit of many self-licensed principals and the corporatised nature of their businesses.
It’s this mindset and approach to business that COIs, many of which are run by like-minded people, are looking for.
Networking
Having a strong, consistent pipeline of referrals is all about making the right strategic connections.
But not every COI is worth partnering with. Both sides need to be picky and do their due diligence.
Some COIs are complementary. They’ve taken the time to learn about an adviser’s business and their ideal client so they don’t refer unsuitable people and waste their time.
They understand that the services that advisers provide are valuable, therefore, they’re happy to facilitate introductions because it’s another way they can add value for their clients.
On the flipside, financial advice businesses need to make themselves as attractive as possible and standout from their competitors. They need to engage CIOs through effective communication and gain their trust.
Demonstrating their independence, which goes way beyond ownership, is part of that.
Like any relationship, getting involved with a referral partner requires a leap of faith. Nobody gets it right all the time but the best practices are always on the hunt for fruitful connections that will advance their business.
Offer understanding, not benefits
In our experience, COIs are not just interested in the potential benefits an adviser can offer but also their level of understanding of the COIs business and client base.
They want to see evidence that they’ve been heard.
In some ways, they want to be treated as a business’ most valued client. Therefore, it’s important to apply the same principles that apply to successful client relationships.
When approaching a COI, discover what’s important to them. This provides insight as to how a useful and helpful relationship may be developed. In this context advisers need to demonstrate:
- An understanding of the CIOs business model;
- An understanding of how to best serve the CIOs clients;
- How they can add value to the CIOs business; and
- How they can contribute to meeting the CIOs longer term business goals.
It all starts here
If you’re thinking about gaining your own AFSL to achieve greater control and potentially win over new referral partners, LaVista Licensee Solutions can help.
LaVista Licensee Solutions is a dealer services provider that partners with self-licensed advisers to manage their obligations to clients, regulators and other stakeholders.
The team behind LaVista Licensee Solutions is the same team behind CoreData’s Licensee of the Year for 2017 and 2018. Based on research by CoreData, the services that underpin LaVista are first-class with the group ranked number one for research, compliance support, adviser technology, technical services and revenue payments.
Find out more about LaVista Licensee Solutions.
Mike Pope is Chief Executive Officer of LaVista Licensee Solutions. He can be contacted at mike.pope@lavista.com.au.
