Struggling planning practices band together

Financial planning practices are looking to pool their office resources in an attempt to lower costs and stave off forced mergers.

The head of Charter Financial Planning, Paul Williams, said as an alternative to a merger they were helping their financial practices share resources where appropriate to cut costs.

“They may relocate, they may share a paraplanner, they may share reception premises, premises [and] receptionists,” Williams said.

Implementing such a move helped lower rent and base staff costs,

he said.

Williams pointed out that encouraging financial planning practices to share their resources also provides scale benefits, allowing them to negotiate with software companies to reduce technology and also lower professional indemnity costs.

Charter successfully managed to reduce its practice costs by 10 per cent to 15 per cent by sharing resources, he said.

Moreover, there was a growing demand in the wider industry to pool practice resources, according to Williams.

“I think adviser principals and advice businesses are thinking a bit more strategically and a bit more laterally about how they can enjoy a scale benefit or share resources,”

he said.

Sue Viskovic, managing director of Elixir Consulting, said sharing resources was a viable way to run

a business.

“Essentially, advisers might be only one or two-man practices. Typically they tend to move in with others within the same dealer group, but there might be a head lease on the property and they may split the overheads between however many advisers are sharing the individual offices; they might have a shared receptionist.”

Sharing resources was certainly a preferred alternative to selling out to another practice, Viskovic added.

“If it’s a way that an adviser can work their way through a difficult time in the market but still stay in business, it’s a great alternative to having to sack staff [or] and not have anyone to answer your phone,” she said.

Particularly when an adviser was starting up their business and lacking the revenue to employ someone full-time, sharing resources with another practice was the equivalent of paying part-time wages and getting full-time support, Viskovic said.

Matthew Esler, general manager, strategy and technical services, at Midwinter Financial Services, agrred advisers would capitalise on cost efficiencies anywhere they could, especially in such a difficult market.

Sean Graham, head of advice at Millennium 3, said it wouldn’t surprise him if this strategy was happening in the wider industry.

The industry went through a process of pooling resources every couple of years, he said.