Article The advice landscape is shifting - could organic growth be the answer?

As individuals that work in the pensions and advice industries, we’re used to operating in a regulatory  environment that can shift at any given moment.

However, over the past few months, there have been positive signs that the government and FCA may be aiming for a more coordinated, growth-conscious approach from now on. And in doing so, a number of opportunities to organically grow your advice firm appear to be taking shape.

To help you understand and make the most of these opportunities, Aegon and NextWealth have recently launched their latest research-led guide, Organic Growth for Financial Advice Firms.¹ And in this article, I’ll try to summarise some of the key elements that highlight just how the market is changing and why organic growth could be the answer for your firm.

A shifting landscape and new opportunities

The government's growth agenda

The UK government has made no secret of the fact that their current priority is to stimulate economic growth – and we see organic growth among financial advice firms as being intrinsically linked to that goal.

In particular, the government is keen to get more people investing, looking at ways to make it less daunting for potential new investors that hold reservations about the risks involved.

For advice, this could be a great opportunity to present the value of your proposition in helping people to ease those worries and make more informed decisions. If successful, you’ll hopefully take on more clients and assets, seeing your business grow organically and intentionally.

Organic growth of financial advice and wider economic growth are two sides of the same coin, with prepared advice firms likely to put themselves in a good position to capitalise on the opportunities arising from the government’s growth agenda.

Regulatory change

While the government is looking to make changes that increase the need for financial advice, the FCA is taking a number of actions focused on opening the service up to more people. The biggest of these is undoubtedly the continuing development of targeted support – exciting because it represents an opportunity for you to offer an entirely new service, but especially so because of who it could enable you to connect with.

When it comes to attracting new clients, our research found that the number one change advisers wanted to see was a more relaxed regulatory framework for serving clients with simpler needs (48%), while more efficient ways of serving lower-value clients profitably came in third (33%). With targeted support, it feels like their calls may finally be heard.

Of course, designing and implementing a new service is a great opportunity for growing your business organically, especially if getting more people in the door through targeted support increases the chances of upselling your full advice proposition. It will take time and careful planning, but as more becomes known about the rules underpinning targeted support, advice firms that invest in strategic tools and skills development will be best placed to make their mark.

Technological development

One of the defining factors of organic growth is the notion of scalability – taking your current proposition and investing in changes that enable you to offer it, and other new elements, to more people more efficiently.

As you’d expect, technology drives a lot of the discussion around scalability, particularly in relation to customer data and reporting. In fact, both easier processes for onboarding clients (35%) and using AI technology to improve adviser capacity (32%) came in the top four for factors that could help advisers to attract new clients.

With artificial intelligence seemingly getter more powerful with every passing day, and new digital tools coming to the market on a regular basis, the potential to scale your business upwards is likely to become increasingly accessible over time. Advice firms that organically invest in their technological infrastructure now could see themselves at the front of the queue well into the future.

Why organic growth?

So, there are lots of opportunities opening up for advisers to potentially take advantage of – but why could organic growth be a more favourable option than other inorganic methods?

The primary reason is simply that advisers want to grow organically. According to our research, over three quarters of advisers say they want to attract new clients to their proposition. And based on other NextWealth figures, there could be a sizeable gap in the market to do so, with only 14% of the 19 million UK adults with at least £100,000 in investable assets currently receiving ongoing financial advice.²

Of course, attracting new clients is difficult regardless of the methods used, but the value in adopting a more organic approach to client generation comes from its greater emphasis on long-term cultural, strategic and propositional impact.

While inorganic client growth – such as acquiring another firm’s client bank – can offer instant access to new clients, the overall impact is short-lived and fixed in terms of scale. You’re essentially helping yourself to a bigger slice of the same pie, rather than baking a bigger one that you can enjoy for longer. There are also the significant upfront costs, possible integration challenges, and a risk of cultural clashes.

On the other hand, organic growth is built around long-term development that continues to deliver a wider range of improvements over a sustained, intentional and gradual process of evolution. Guided by a clear organic growth strategy and a collaborative internal culture, this could mean devising better client targeting within your marketing function, investing in new technologies to allow for scalable and efficient data processing and storage, or developing a new proposition that diversifies what you can offer and who you can offer it to. Each of these elements grows your business as they’re actioned and introduced, but also provide a platform from which to further grow in the future.

Organic growth for financial advice firms

Prioritising organic growth can take your business down so many interesting and rewarding avenues, hopefully setting you up for many years to come. It’s why we’re so excited by the Organic Growth for Financial Advice Firms guide and everything it offers in helping you to maximise your firm’s potential.

If you’re intrigued by what organic growth can give your business, you can read the full guide on our Developing your business hub. Or you can check out our helpful article on the 6 steps to growing your business organically.