One of the biggest challenges for IFAs is how to ensure their businesses stay relevant in the next five years, the chief executive of Skerritts Group has said.
Richard Skerritt told a Nextwealth conference yesterday (March 21) that he speaks to three or four companies per week, as part of the group’s acquisitions plan.
“[IFAs] are really worried about how they are going to future-proof their businesses,” he said, noting that their biggest worry is how technology is changing.
“For smaller firms [especially] that is a big concern, because it is very difficult to spend hundreds of thousands of pounds on a tech proposition,” he said.
Skerritts Group is funded by Sovereign Capital Partners, a private equity buy and build specialist.
The company has bought a number of IFA firms in the past few years, including Saffron Wealth Management and Geoffrey Craig Limited.
The resources available to Skerritts as a result of the private equity investment are a "game changer", Skerritt said.
“Lot of firms are saying how do we get to that next stage [of development] and are we going to be left behind?” he said.
The ability to adapt to change is key for IFA firms, Skerritt said, and if they are able to do this they will see “massive efficiencies”.
He used the example of his own firm, which realised it was using 15 different platforms for its clients, and for one process the client’s name had to be entered in 11 times.
“That is crazy, and there is no reason for it. We need to start addressing these kinds of things.”
Skerritt noticed his clients expect to access a lot more through their phones.
“Other than the consumer duty, we see the biggest challenge as adapting our businesses to be fit for [purpose] in five years’ time.”
Some of these changes can be simple, Skerritt said, for instance he now organises videos for clients instead of sending paper documents.
“It is really simple stuff,” he said.
Tech investment
More than two-thirds of advisers increased the amount they spent on tech in 2021, according to FE Fundinfo.
However, data from Nextwealth shows that IFAs are missing out on the full benefits of the systems they use, with companies regularly using less than a quarter of features available to them.
Adviser tech providers said they struggled to get users to fully adopt, understand and embed their systems into the advice process.
Time was the biggest barrier, highlighted by 45 per cent of respondents to the report as the reason why they did not adopt new tech.
A lack of good solutions for firms of their size was also noted (39 per cent) and a lack of demand from clients for tech-enabled advice was another issue (27 per cent).
sally.hickey@ft.com
