Clients rate the business relationship they have with their adviser above all else – but this can be a two-edged when it comes to principal dependency
Out of the nine key service delivery areas covered in the Business Health CATScan survey, clients rate the business relationship they have with their adviser above all else. We fully appreciate that, by the very nature of the work they do, extremely strong bonds develop between great advisers their clients. This depth of relationship is a true business asset and while such key person dependencies can never be eliminated, there are some practical steps that can be taken to manage and mitigate this business risk.
The recent Future Ready IV whitepaper, sponsored by Securitor and researched by Business Health, clearly highlights the perilous state of succession planning among practice principals. It found that less than one in three has adequately prepared their business for the transfer of ownership.
This risk becomes further magnified when we overlay the feedback from the 40,000 plus clients that have recently completed our CATScan client satisfaction survey. It found that 65 per cent of all clients would not be comfortable dealing with anyone else in the practice other than their current adviser. Given, in many firms, the practice owner is also the adviser to the key clients, it would appear principal dependency is very much alive and well in our profession.
While this may not have been a huge issue in the past, remember, the average age of practice principals is now 57. Many owners are starting to seriously consider how and when they will exit their business or perhaps wind back their day-to-day client facing activities and take on more of a strategic management/mentoring role within their practice.
If you feel that your practice may not thrive (or perhaps even struggle to survive) without you at the wheel, next week I will outline 10 suggestions on how to reduce principal dependency and improve the value of your practice.
Ahead of the launch of the fourth season of No More Practice, we will also be launching an innovative tool that can you help determine the value of your practice. Watch this space!