Benefit for advice businesses that offer general insurance to HNW clients goes beyond good service
I have read many articles over the years about servicing High Net Worth (HNW) clients in the financial services industry; however, most businesses that put together a HNW Best of Breed service model do it without looking through the eyes of their clients. In fact, very few businesses have a model that effectively and comprehensively services the needs of HNW clients. HNW individuals, professionals, families and business owners, typically have considerable estates with complex accounting and taxation requirements. This complexity requires a broad range of financial services, a clearly articulated value proposition and the ability to work in tandem with the client's accountant, lawyer, life insurance advisor and finance provider. HNW clients also tend to stay with their planner for the long term and are often brand ambassadors for the planning business referring the practice to their network of peers, friends and family members. Hence, HNW clients can be both challenging and rewarding as they want their planner to intimately understand their personal, business and family dynamics as well as their estate planning aspirations, cash flow, assets, liabilities, taxation situation, etc in order to manage their account holistically. HNW clients own many valuable assets and possessions such as larger homes, fine art, antiques, jewellery, etc. that require the need for asset protection – and yet many accountants and planners fail to provide a general insurance service as part of their Best of Breed offering. In these times where business growth is a scarce premium – expanding the HNW client offering should be as easy as increasing your service offer! I raise this perspective because, over the last few years, there has been an increase in M&A activity within the general insurance market from overseas businesses. This mirrors their past interest in accounting and financial planning businesses. Recently, I have been approached by overseas buyers looking to purchase general insurance broking businesses from $1M - $20M in revenue. I have also helped to facilitate general insurance brokers into high-net-worth accounting/Financial Planning businesses to service their HNW clients. At the present time, general insurance broking firm valuations have EBITDA multiples higher than both accounting and financial planning businesses. Sometimes the best opportunities are simple and, by offering comprehensive and holistic financial services that include general insurance, ensures all aspects of the client's financial picture are considered and integrated into a cohesive plan. Not only does this comprehensively address each client's unique challenges and goals, it increases the value of the practice and reputation of the business.How advisers are slashing up to 30% of business expenses
This article has been taken from the NMP education library which has now moved to Advisely There are some green shoots, however. For the first time, there has been a concerted effort to try and drive the cost of financial advice down and make it more accessible. And anyone that runs a financial planning business knows that the cost savings cannot come from fees charged. The cost of giving advice, and the compliance attached, is just too expensive to even consider lowering the fee for service. So the next step is looking at what type of advice to give, and whether some red tape can be cut around more basic advice. And, as it happens, the majority of Australians really need quite basic advice. Their super, their retirement age, the tax implications and social security – this type of advice can be invaluable to someone in the planning phase, and people will increasingly turn to their super fund to help them address these issues. This leaves advisers with clients who pay a fee for service, and understand the value for that, which allows advisers to focus on driving their own business costs down to increase their profits. While comprehensive advice may never be free of the compliance levels attached now, the costs associated with delivering it can be lowered. COVID has given everyone a new way of working – and some people are realising that they may never go back to the way it was before. So taking planner premises out, and even outsourcing paraplanning rather than having staff on-site, can take serious costs (up to 30%) out of a planners’ outgoings. The other facet of the business that can help drive down costs is technology. Online meetings now being the norm, and home offices cutting out costs, plus outsourcing administration, are significant cost savings for advisers. While it may be hard to realise these savings with overheads that are still contracted, when it comes time to renew leases or look at staffing and tech policies, planners have a real opportunity to view overhead reductions as their most significant way to increase profit. Because after all, profitable planners means successful clients. A win-win situation.
Business Strategy
There's a lot that goes into advice that the client never sees. We do.43 Posts
