Long-term success depends on your clients understanding that it’s a group effort. Rod Bertino explains.

Because Business Health engages deeply with both advisers and their key clients, we have access to a truly unique and multifaceted picture of today’s marketplace. By integrating the key insights gained from our exclusive data, we are able to identify and track emerging trends that have the potential to impact the future success of Australia’s advisory practices.

While our Business Health Future Ready IV whitepaper clearly highlighted the perilous state of succession planning among practice principals, 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.

Sixty-five per cent of all clients would not be comfortable dealing with anyone else in the practice other than their current adviser. Given the practice owner is often 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.

Of the nine key service delivery areas covered in our CATScan survey, clients rate the business relationship they have with their adviser above all else. 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.

While it is now universally acknowledged that principal dependent businesses have a much lower capital value, our HealthCheck data also shows that those practices with an effective succession plan (which of course includes identifying and addressing any key person dependencies) deliver 106 per cent more profit per principal than those without. A return worth the investment of your time and effort?

Rod Bertino is a partner and director of Business Health – www.businesshealth.com