Member Update 24th May 2019
Written on 24/05/2019

Test Question

What is the current auto-enrolment participation rate for employees for small businesses?

a)80 percent

b)60 percent

c)40 percent

d)70 percent

The correct answer is D

Cashflow modelling - Essential or Superfluous?

Over the years the financial services industry has come up with lots of “tools” designed to help a Financial Adviser do their job. 

If any of you remember the heady days of Friends Provident First Call, then you’ll remember fondly the “Rate Mate” which helped you all decide how much protection plans were going to cost your client there and then (subject to underwriting of course!) this was a tool that offered a limited ability to help you do your job. 

We have moved on quite a lot since the early 1990’s and there are plenty of tools swimming around the market that can potentially help an adviser do their job, tools for:

IFAs value skyrocket

There has never been a better time to be an IFA.

The IFA industry is in crisis.  This is not a conventional way to announce why times have never been better!  But it is true.  Your IFA practice is worth more than ever before.  The crisis is in PII.  Any adviser firm who did ANY DB work at all is getting hit by high PII premiums (ie double) and large excesses, meaning holding extra capital – perhaps £15k per individual RI added.  At the trade fair FSE MANCHESTER – billed originally as “for IFAs”,  there wasn’t a single IFA attended….all MGI and mostly specialist lenders/brokers at that.  And IFAC keep getting calls from (almost all small) IFA clients who want to give up and need help with incredibly complex resignation process..

This is excellent news for those in the industry who are interested to build their firm up to sell.  Never have the barriers to entry been higher.  All those costs of FCA and compliance are willingly paid for by customers and what is not to like about the almost total lack of recruitment in the sector?  Put your fees up to pay the higher costs!

In the last year we have seen some ground-breaking deals, setting new highs in our industry, in spite of the gloom and giving an indication of direction.  Quilter bought lighthouse for £46m – some £100k for each member of the network.  Compare this to the Sesame deal of 20 years ago, when Misys bought DBS for £20k per IFA.  That’s a return of X5 in 20 years, or 8.5% per annum compound growth, at a time when the FTSE 100 has barely moved the dial and many say we are economically worse off, stuck in post crunch austerity.

In the same way Invesco bought Intelliflo for £200m this year.  And Simply Biz has now bought the heavily loss making and chronically debt laden Defaqto for £75m this year.  Neither of these are any more than support providers, and the valuations are totally unrelated to their profits (or £2.6m per annum losses in Defaqto’s case) 

What do these buyers have in common?  And what do they want?

The answer is they are buying influence over your decisions.   Fund managers wants your money.  Which CIP do you use? The CIP, is the end result, and the fund managers, hold big cheque books, and need a route to market. You the IFA are the route to market. There are less and less of you, less competition and the inducement scandal is like the loss of both knights in chess, it has blocked their path to the king, and they need another solution.

The continued and freakish success of SJP is leading others to consider that if you can’t beat them, you should join them.  So fund houses are buying IFAs, and getting access to their CIPs.  

More and more regional IFAs are coming to the fore and valuations are going through the roof, just as the going gets tougher than ever with yet more regulations – Mifid 2 of 2018 being followed by SMCR of 2019.  Now is your chance to build a long term sustainable business by using CIP to reduce time spend per client, cut costs and consolidate your hard earned assets under management into a format that will have the buyers salivating.  Forget independence, use CIP and join the restricted IFA revolution that is taking place.

CIP audits remain our most popular service and download at present.

As your first step see the Investment SR in the doc library in BAT and start to put together your CIP.  When done get IFAC to audit the result, and in this way you can roll the solution out like a Ford Model T.

CIP download attached   see here under "panel and investment research" on doc library

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