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Why this protection adviser shut up shop after just six months

Why this protection adviser shut up shop after just six months

An advice firm attempting to break into the business protection space shut up shop after just six months, signalling the gruelling path such businesses face when starting from scratch. 

Starting a business protection adviser is not easy and some question whether it is a viable business model at all. 

When Samuel Marriott and his business partner, who does not want to be named, went down this route in May 2021 things quickly became costly and difficult, leading them to close their business a mere six months later. 

The pair had relied on a strategy of low start up capital and high initial income from advising clients with individual voluntary arrangements. But when their network told them it no longer tolerated the comparatively risky line of business, they quickly realised funds were drying up and they had nowhere else to go. 

Lewis Shaw, director at Shaw Financial Services, said providing business protection advice alone was not feasible.

“Business protection can be a pain and certainly is not a viable business just doing that, as most of the time if it's necessary we'll talk it over during a mortgage application,” he explained.

Shaw said concerns such as ‘what happens if you die’ and ‘how do we buy you out of the business’ were all typically covered in a mortgage meeting, meaning a business protection adviser might struggle to cover fresh ground.

Tom Conner, co-founder of business protection advice firm Drewberry, said he often met self-employed advisers who were having to spend half their time trying to generate prospects, with only the other half left for the advice and administration.

“It's very tough,” he said. “Whether it's in the business protection space or any other space, going out alone is incredibly difficult. The hardest part of any business is obtaining clients.”

Kevin Carr, chief executive of Protection Review, agreed client acquisition can be hard, but also highlighted the need for advisers to know their markets.

“All businesses need customers and if you don’t know - or haven’t properly researched - where you’re going to get them from pretty early on you’re in trouble,” he said.

“The question is whether or not it's feasible to only do business protection, or if you need to start with wider family protection and build from there. 

“If I was going to launch a stand alone business protection only adviser, I’d be talking to accountants, solicitors, and local businesses first, as that’s where a lot of clients can come from.”

Starting from scratch

Samuel Marriott, co-founder of now disbanded CSE Financial Services, started up his firm in May 2021, but closed it in October of the same year.

Without significant starting capital, Marriott and his business partner were determined to keep costs down from the outset. They spent just £50 converting one of their garages into an office, for example.

Its business plan was split into word-of-mouth referrals and leads via introducers.