Signing new clients is “more important than ever” amid increasing PI insurance premiums and FSCS levies, according to an investment management service.
In a new guide for advisers PortfolioMetrix urged advisers to look for ways to sign up new clients and write new business to ‘offset’ increasing costs.
It warned: “Unless you’re confident you can pass all of these increases on to your existing clients via higher fees you need to find a way to offset these costs. Or accept that your profits are going to shrink.”
Last month FTAdviser reported that one adviser had been hit by a 174 per cent increase to its FSCS levy this year.
Additionally, some advisers have seen their PI insurance premiums rise up to 900 per cent from last year.
Ben Peele, UK managing director at PortfolioMetrix, said: “From our own anecdotal research, we think only one in ten advisers have written new business of any significance since March.”
Mr Peele added: “The longer the pandemic goes on, the harder it will become for firms who have found signing new business a struggle.”
Piers Mepsted, managing director at Financial Advice Centre, agreed. He said: "The cost of regulation, PI and industry levies continues to grow significantly each year and we have seen many quality companies forced out of business already.
"Those committed to growing and thriving in our industry must evolve and do our best to embrace these challenges by not only attracting new clients to increase the pool of people to divide these costs, but also by moving towards a lower cost technology based service proposition.
"We have had no option but to accelerate our plans in this area due to the pandemic with great success, while examining where we can reduce costs and save time."
Advisers with an older demographic of clients will also need to replace the assets under administration they are losing each month due to clients in drawdown, PortfolioMetrix said.
The investment management service suggested signing new clients could help maximise the value of an adviser’s business before it is sold.
It comes after research from Octopus Investments found that 62 per cent of advisers planned to retire by 2030.
Finding new clients
Ensuring existing clients know that advisers are ‘open for business’ and maintaining the face-to-face experience, such as with video messages, rather than a voicemail are some of the ways advisers can attract clients, according to PortfolioMetrix.
Advisers can also check in with existing clients. Mark Finster, director at Helm Godfrey, said: “For me, the last few months have been more successful than I was expecting.
“Around 75 per cent of the new business I have written is related to existing clients, looking at their needs and making sure they have the right products and services in place.”
PortfolioMetrix also suggested lead generation firms as a way to find new clients, although it advised caution after receiving ‘mixed feedback’ from advisers.
According to one adviser: “These firms make money on each lead provided but the quality isn’t great, so you have to triage the leads aggressively.”
Commentators have previously cautioned advisers on using lead generators to help drum up business due to cost, relatively low conversion rates and “dubious” tactics used by some lead generators.
chloe.cheung@ft.com
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