Part disposal following a review of an IFA’s business

The advent of Treating your Customers Fairly has encouraged many IFAs to critically look at their own business.

This can result in IFAs deciding to concentrate on certain types of client, which raises the issue of what to do with the other clients. Forinstance many firms have chosen to deal with high net worth clients, perhaps because they are unsure that they can deal profitably with lownet worth clients. One option is to sell their LNW clients. This raises cash, reduces compliance issues and streamlines the business.

The 80:20 rule applies to many IFAs (that 80% of your clients produce only 20% of your income). Examination of the 80% will normally reveal a significant number of dormant clients, many of whom will never again earn income for the firm. A review of these clients can often leave aleaner, fitter business. Why keep problems if you are not making profits from them? We all want to offer our clients a high quality service. Is that what we are offering dormant clients?

For example it can be difficult to profitably service a single premium pension or bond client without trail who is unlikely to introduce more business. Where a small trail is involved the compliance requirements can make this type of client even more onerous.

We are retained by IFAs who wish to purchase these types of clients, especially LNW clients. They are able to offer this type of client a high level of service at a profit because their advisers, business models and systems specialize in LNW clients.