Are Small Independent Financial Advisors at a Crossroad?

So grab a coffee , sit back and let's get ready to blast off . I'm your host , frans van der Toij . How do you ?

It is actually also coming from other places , because when you've got to make sure that your business has good governance and that everything is in place and that all the compliance is up to date , it goes far beyond what we need to do for the FSEA .

It goes to the CIPC and SAR and all sorts of other legislations and things that we need to comply with and adhere to , and all of that . It's becoming harder and harder and harder for small business owners specifically to stay on top of all of this .

And I've had way too many um conversations in the last two months or so , but even like this entire year , particularly the last months , where quite a few small advisors saying like , is this still worth it ? Is this something ? Is this what I signed up for ? Is this what I wanted to do ?

You know , I did this because what I wanted to be independent , I wanted freedom , I wanted to do all of these things and now suddenly all I'm doing is working . My clients are going on fantastic trips , but I'm sitting here working . You know , I don't get to go and do those things because of all of the things that need to get done , and that's a reality .

I don't think that it's not because you're doing something wrong , it's not because you're not a good business person . It is simply because that is the environment we find ourselves in . And I've seen so many people that I never , ever in my life thought would go from independent to join a bigger FSP .

Do that , and many of them have youngsters oldsters , if that's a word you know like everybody's sort of saying look , I just want to be a financial advisor , I just want to be a financial planner , that's what I wanted to do . I just want to enjoy again what I do . I don't want to worry about all this other stuff . Let somebody else else do that .

And that's a reality . And for the first time , I see people really being faced with that question , whereas previously it wasn't even a go-to for them at all . They didn't think about it .

I'm here , I'm building my business , I want to do this my way , and I think it's really important for us to say well one , it's reality , it is what it is , but also it means that we can't keep doing things in the way we used to do them , because you can't expect a different outcome or you can't expect things to change if we still do it exactly like we

did it five years ago or 10 years ago or even when we started out . So all of that stuff is is so , so important , and that's what I want to talk about today , to say , well , first of all , how do I decide ? Do I want my own business and be a financial advisor or planner , or do I want to just be a financial advisor or financial planner ?

How do I decide what's important ? Is it a case of , oh , now I'm giving up , and that's not . I wasn't built to give up , because there's a lot of emotional things that obviously are involved in in this as well .

So , so let's start off with that sort of around deciding your , your path , and I I guess some of the things that you need to to to think about is obviously , you know , what are your , your strengths ? I guess that that's always a good place to start . What are the things that you're really good at ? What are the things that you really enjoy ?

What are your preferences . You know , for me , for example , like I always say at some point you know a lot of people were asking me in the family you're not ever going to go back and get a job . Because there were tough times , right , and I always said I'd rather be facing this and sorting this out than go back and work at a place .

And I still hold that true . And there has been times where I had to four times go and work at places in order to sort of recover and get myself back into shape and to learn and to see . But you know it wasn't long . Then I said like this is not for me . Even if I went there with the purest of intentions , it was not not what I wanted to do .

I want to do my own thing in my way and I want to bring people with me on this journey . So so that's it for me . But people are different and also it very much depends on where you find yourself in your journey .

You know , are you getting closer to a time where you think I now want to start working less , but at this pace I'm not going to be able to do that , so that becomes a concern . Maybe you start to really get worried about succession and I put that in inverted commas because I think the way that succession is being used today is really to acquire businesses .

It's not really always the fact that this is really succession . It's being promoted and talked about and even a lot of independents are getting their little contracts in place and all of it , but it really doesn't mean that there's a succession plan . So I'll talk about that a little bit later .

So the one thing is what are your strengths and your preferences and what really makes you happy ? What's driving you from inside ? And only you can answer that question . The other thing , obviously , is to say that question . The other thing obviously is to say you know what do I want ? Autonomy , um , and be able to make decisions and do things my way .

Or do I just want to get rid of this administrative burden and I'll go and just , I just want to go do the job of a financial advisor and just deal with some of the admin and not all of the admin that comes with the business . But also maybe you know , depending on where you are , what are your long-term career goals ? Where do you want to get to ?

What is it that you're building , who you're building it for and all of those kinds of things . So , um , you know where does ? Because I think I feel quite strongly that you know there's all this talk about work-life balance and it's a real thing and we all are really aiming for that .

Because when you start having conversations with your spouse or your family and things , and you realize , like all you do is working , that's not a good thing at all . So I'm not disputing the fact that we need more balance . However , you can't just have balance all the time . Balance will go up and down .

You'll have some balance and then sometimes there will be no balance and that's perfectly okay and I think we also need to realize that .

But if we start taking these little few factors into consideration , you already because you know , yeah , in the pit of your stomach like I want to do my own thing , I want to run my own business , this is what I'm going to do , I've got to figure this out .

And it's not because you're stubborn , it's not because you don't want to acknowledge that maybe you have to go somewhere else . It is the fact that it's a burning fire in your belly that says this is what I'm going to do . So then you have a few questions right , or a few options , obviously .

So I want to talk about that as well , but only you can answer that question . I can't see the fire . I can't feel the fire . I can only feel my own . So what are the options right ? So , once you figure that out , obviously that's one part to consider . The other part to consider , sorry , is to look at the different options that is available .

Now , obviously , the one thing that maybe everybody wants to do , or most people want to do , is I want to maintain my independence , I want to maintain my business . Now , often what happens is that you've got a large , so-called independent FSP .

They're independent , they've got multiple contracts and whatever , and you go join them because they're still independent , but they're much bigger and they offer you all of these services that can help you do exactly that you know , so you can go focus on the job and they will worry about all of the other things and provide you with infrastructure and all of those

things . Fantastic , it's really amazing . But you've got to understand that when you do that , you don't work for yourself anymore , you do work for them . You know , one of the biggest mistakes . I think and I said this to somebody the other day that the biggest mistake we made was to make people believe they work for themselves because they work for commission .

If it's not your license , it's not your company . You don't work for yourself , you work for someone else and we also need to get that right and it's okay . That's your decision . But be clear , don't think you work for yourself because you , you earn commission . That that's not really true .

So if you want to do that , um , you know you can maintain , you obviously can keep your business and we can change

thing . I'm gonna talk a bit more about that in a second or you can join a larger business , like yours , for example , um , so , so that's one of the things . You can also decide to become a tight agent right , because you're going to really reduce one of the things .

You can also decide to become a tight agent right , because you're going to really reduce all of the complexity . You only have a few products to worry about , you still get all the other benefits of infrastructure and support and all of those good things , and you can literally just be a financial advisor and have less complexity in your life .

So , again , that's one of the options , right ? The other option is what if ? And this is the one thing that and this will go and link onto my view around through succession as well . But what about you find one or two other people like you who's in the same position ?

You have very similar vision , very similar values and you sort of , maybe in different parts of your journey , maybe even you have different areas of specialization . It's not not not a must have , but it's a , it's a very , you know , it's obviously useful .

If that is the case , and the three of you , or the two of you , or the five of you , it doesn't matter . This side , let's explore whether we can actually work together .

But there's a lot of work that needs to go into that to make sure that you're all aligned , you're really all on the same page , because there's nothing worse than finding out two , three , four , five years later that you're not .

But then you combine your , your businesses , and it's not should not be a case of um , you know I keep my book and you keep your book , and we share our back office . I believe you should really start a new business if you will , and all of the books should go into that business and all of the back office should go into that business .

Now , the benefit here is that one whereas you know there's , there's obviously , uh , economies of scale or at least sort of areas of efficiency that you can unlock by doing that , by combining things , but also now you can share the accountability load between you , so the governance , the compliance , like all the other stuff .

Every partner , then if you will , I want to call them partners every shareholder , every director might then be responsible for a specific part , and maybe one of you might be in charge of making sure that , coordinating all of this and making sure it happens .

I don't want to get into too much detail that's not what today's about , but you would then have a bigger business that you can really then manage and really combine forces , but not doing it on your own .

You've got other people to help you in certain areas of the business , to take off some of that load , and as you're taking off from someone , they take off from you and suddenly you're sort of getting your life back .

Now this is a very hard and complicated thing to do , but I also believe it's a very worthwhile thing to do if you get it right with the right people , and then you keep your independence , you build a business , you build longevity and things back into your business by doing that , plus as I'll talk about the succession in a little bit that now , if we're all

looking off the same club , so imagine this sort of scenario , right ? So let's just say you love investments , the next person loves , maybe , eb and the other person loves , I don't know , risk planning or whatever , estate planning . Maybe you've got one client with a need for all of it , right , and now all of you are working with that client .

That's through succession , because now , if something happens to you or one of the others , the client already has a relationship , whereas in most other instances in succession planning it's a contract between you and I .

The client doesn't even know I exist and even if you tell them you've got a contract with Francho , they still won't even remember my name by the time something happens to you . So that's the important part here , right ? So I'll get back to that .

But merging with them because you can share costs , there's more expertise in your business and obviously through that you can have an improved work-life balance . I just said to the to , to , to nikki , and if before the show , one of the one of the hardest things is to is to get , well , they said it's .

It's hard to get time to think these days , and I said , well , what's even harder is thinking on your own and thinking by yourself . So having other people to think with will change your life in ways that you have no idea how that will be . So for me , there's a big thing there as well .

And then obviously , the other option which is not one that I want to see anybody do is exit the profession . You can just call it a day and decide I'm rather going to go and get a franchise of something and let me just go and run that and don't worry about the rest . That's not what we want . We need amazing people like you in this profession .

We need new people in the profession . So how do we create this ? And it's really interesting . Maybe some other things we can think of is just maybe working together with other people and just creating a little group and where you share and do things . You could maybe join a community and do things like that .

Maybe you decide look , instead of having a big office , I'm just going to have a virtual advisory business and really pivot your whole business model . I mean , there's loads of other things that you can do , but I sort of wanted to leave these four main things with you . So just to recap those quickly that you can do .

But I sort of wanted to leave these four main things with you , so just to recap those quickly . Um , the thing first thing is , you know , maintaining independence , but that really means that you , that you uh join a bigger independent fsp and you just go do the job of financial planner .

Secondly , you can go tied , because you reduce the complexity even further , but obviously you don't have more products or more things to advise on .

And then the the big one for me that I would like to see more small business owners do is to come together with other small business owners and form a little bit of a bigger business and have better structures and things in place to really build something of value that you can exit from someday as well . Okay , so those are sort of the three main ones .

And then the fourth one is obviously exiting the profession , which I don't want to see anyone do . Then I guess the other thing to consider is how do I build longevity into my small IFA business ? Now , here's the amazing thing thing , right ? So , as many of you may sit here and say I don't know , like I can't keep up . I can't .

There are people who who started their business a year ago as an independent solo practitioner . Because the question is , you'll see lots of articles and posts and things that go around saying like , oh , you know , the , the , the solo advisor , will be no more , or will they be , or will they go extinct , or whatever the case may be .

And yet here's some people starting a brand new IFA business on their own , literally on their own , and the only difference between them and the other people are one maybe well , not the only difference , but the big difference would be maybe they're in a different point in terms of their lifestyle , and there's things they can do that you can't do at this point ,

but the benefit that they have is that they could implement and use the right technology from day one , whereas many times in our businesses , our technology is sometimes the thing that holds us back , because there's all this legacy stuff that we need to deal with and oh , I've got to move from this to that , or .

But I now learn a new thing and like I don't want to do that . And now you know , tech one doesn't speak to tech two and it's just , and now it becomes , whereas other people go and they just here's the solution , let's go with it .

And that's really something to go and consider to say well , you know what is the outcome of staying the way that you are , what are the possible benefits of changing and what's the pain I'm going to have to endure to make that change . But is it going to be worth it ? And I'm telling you today that in most cases it's definitely going to be worth it .

There will be some of you like no , it's just not going to be worth it . Let's just continue the way we are or make one of the moves that we spoke about . Let's just continue the way we are or make one of the moves that we spoke about .

The only thing that really makes you efficient is really considering your workflows and then looking at technology that can help you with that . I'm not so big on that .

You need technology on the client-facing side of things at this point in time , but in the back office you can really help your team and your business by really understanding , like do we have great processes and how do we use technology to do these things ?

In a very simple way and to do most of the work for us , or at least some of the work for you , because every time you are able to let tech do something , you save time and , even if it doesn't feel so in the moment , over time it saves you a lot of time .

Um , obviously , some other stuff is to like when last did you , did you I'm not saying like cpd , right , but beyond cpd , beyond cfp , beyond all of these things what have you done ? When last have you , have you worked on your skills ? When have you looked at ?

Isn't there a different way I can connect with my clients and talk to my clients and extract more value , specifically from my existing clients , for example ? So when last did you do that ? Like I just recently this year .

Like the last time I studied , like really studied , was in 2011 , when I did my CFP , my post grad , and then the CFP certification , and and it's now the first time where I've really enrolled into things , where I actually pay a lot of money to be there and to be part of things and to really go and learn with other people .

It's been a while and I'm telling you it is life-changing . In such a short space of time , of course , you start thinking differently , you get exposed to things that you haven't gotten exposed to before . So you really got to think about those things like when last did you work on your skills ? Because that is a way of getting out of this .

The problem is , we're often so busy that we feel we don't have time . I'm telling you today that we have to make time . We have to , we have to , we have to .

And then the other thing is as well is like you've got to think about what are other ways of easily creating new revenue streams , because you know , we only think about we only think about product related revenue streams , but what about other revenue streams that you can maybe go and and create ?

So one of the things we showed was , with tax space , for example , how you can create additional revenue streams got nothing to do with products , nothing to do with implementation or anything like that by simply providing a very simple service . Um , you know , you can really add a lot of value . Number one . Number two , get paid for it .

And number three , unlock even more opportunity and business off the back of that . So it's things like that . Like what else are you considering ? That's ethical and moral , obviously very important , and that's within the bounds of the law that you can do . What can you do in order to generate other revenue ?

For some of you , it might mean you can start focusing . Can you do in order to generate other revenue ? For some of you , it might mean you can start focusing on other product lines . Absolutely . For others , it might mean that it's a completely different service .

Maybe , when you talk to clients , you find out they have a very particular problem and maybe you can create a product for that or a solution for that . Never say product . It could be services that you package and that you want to sell to them . To help them solve that .

Maybe you have to enter into a , an agreement with somebody that serves clients like the ones that you want to do . That already got access to them . You know how can we do that . But the problem , yeah , the biggest challenge is and this is what I'm finding is that the time to do this ?

So if you don't prioritize this , nothing's going to change and it's hard to . It hurts , trust me . Um , there's things I'm saying no to . There's things that I don't get to . There's things that keep me awake at night simply because I'm trying to to also do a lot of the other stuff .

So that's that from a from a longevity point of view , I still think tech is the biggest thing , your skills are the other big thing . Um , and then obviously sort of thinking about where are the opportunities to build other other revenue streams in succession planning .

Succession planning is a very important topic for me because succession planning is not a case of when I die or become disabled or retire , I want to still earn a revenue stream or my dependents still need to get a revenue . That that's not succession planning . It's looking after yourself right , and that's right . You should do that .

But succession planning is about the client . How do we make sure that the client is and that the client has got now what ? Who's going to look after my things ? Where am I now going to find somebody I can trust ? But wait , franchis got an agreement with pete pompies , and pete pompies that must be a great guy , so I'm okay to stay .

That's not what happens in reality . People leave , they go and look for other financial advisors and financial planners because we don't do succession . Well , the compliance office says do you have a succession plan ? No , let me talk to franchis .

Let's sign an agreement next time the compliance officer come yes , yes , yes , the agreement , okay , fantastic , everybody's happy and off we go . But that's not real succession planning you really want to think about . How can you really ? You've got to work or work with the client . The client has got to get to know both of you , or all of you .

You know , in the bigger businesses they really do this well . And I say bigger businesses , it's not even massive businesses , just a little bit bigger , where there's more than two or there's two or more financial advisors , financial planners . They're really good at this because the team looks after the client and that's the difference .

So you want the team to look after the client . The client has confidence that whenever Francho falls away , don't worry , pete is still there and he's still going to look after me , or Sarah's still there and she's still going to look after me . So those are the things .

So maybe you know , from a point of view , that's really , really an important thing for me , a message to get across and just to get you to think . I don't have all the answers for you this morning because we don't have time , but you've got to really go and critically evaluate the things that you're doing in your business .

You can't treat it just like a job anymore . Those days are gone . You've got to treat it like a business . And if you don't have the business skills and you don't know what to do , go and learn them . Like there's many people that will help you with that . We will help you with that .

Like there's things , right , I don't have all the answers , but I'm learning every single day in my business , like what works , what doesn't work . We're doing the things . A service business is a service business , right , working with clients or working with clients , it's the same kind of thing , so really , really important .

The only difference is that people might share things with you that they won't share with a business like mine , for example , because you are in a different position . Then also , um , just briefly around around , obviously , the value of your business .

When it comes to succession , it's a hot topic , right , there's businesses that recently launched valuations and all sorts of things . Now , there's an important thing that I need to say here . We all want to know what our businesses are worth .

We're all interested to understand that , but to know that you really got to delve deep into your business's details and the finances and the assets and incomes and all of those things , and all I want to say is just consider who you share that with and where you go .

Have conversations about that , because that's important , right , be very , very clear around what the sort of intention is behind it . Be very , very clear around . Like you know , is the focus on you to help you or is the focus on something else ?

So just be very , very clear around those things before you start using just things that are available out in the market . This is something that you need to be talking to somebody about that works in your business or that works with your business in order to grow it . That's it . That's where you go and share it .

You've got to share it , talk to your accountants about it . You've got to maybe even pull in lawyers and things to talk about it , but those are the kinds of things that you really need to consider . It's not as simple as going to plug in some information somewhere .

It's a very different thing , if you want to , to assess your business and just to say , well , where can I improve ? Right , and it's sort of things that that are checking whether you've got certain things in place or not , and that's very different from saying , yeah , let's do evaluation for your business .

Uh , I just said when there's somebody that moved in across the the hall from us , uh , in the at our offices , and that's what they do .

They do valuations and I'm going to add a bit of a chat to to the guy and it's really interesting , like the kind of information that they need to to do this , but it's very personal , confidential information , so so just be clear around that as well .

Then , the other last part about succession planning that we all need to consider , that we don't always think about is really , you know , there is this transfer of the client to somebody who's taking over . Let's just say , now somebody did not die and become disabled , that we actually exiting the business and retiring .

We've got to think about that transfer process and we also got to think about the knowledge transfer , because we often think it's just the client , but what about the knowledge that I have about the client ? What about the knowledge that I have in order that enables me to service that client ?

So you can't really just say , well , there's just a contract , because that's ticking the box . There's more that needs to go into this . Now , obviously , this is one of the things that makes small IFAs nervous as well , and don't let it make you nervous . Just start working on this , just start thinking about it and start engaging around it .

So it's really , really important . You know , I think when you think about figure out what is important to you , what's that fire in your belly , what do you enjoy most doing , let that guide you into your next sort of choice around . Okay . So am I then , based on that , going to join another business ? Am I going to go tired ?

Am I going to to merge with some other business ? Start looking if we can't put something bigger together I'm not going to mention the last one because I don't want you to do that .

And then , secondly , just look at how can you build in more efficiency , how can you get longevity back and sustainability back into your business by using technology and by upskilling yourself and your team . That's very important .

And then really look at proper succession planning that will help you unlock value from your business , because if you now build a bigger business with systems and things that are really it's a business and not a practice , it's going to be worth more when you want to exit . So you've got to think about those things as well . Obviously , a very , very like .

It's a difficult topic that I spoke about today , so let me just lead with that before I do the draw . Um , it's really , really a hard thing for me to talk about . It's a very personal and a very emotional thing for me to talk about , sorry , when I got into the industry back then in 1998 , those are the people that I worked with .

I didn't look after tight people , I didn't look after banks , we looked after IFAs . I want to see you guys succeed , all right . So let me stop there because I'm making myself very emotional , right ? So that's it . Thank you very much for joining us , really appreciate it . We'll be back next week , same time , same place .

Until then , stay safe , be blessed and prosper and continue to raise the bar . Love you , bye-bye .

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