When it comes to practice size, smaller is certainly better for some planners despite the challenges of hiring other good advisers.
“Having previously worked in a large ASX-listed financial planning practice, working in a small boutique practice is a breath of fresh air,” Main Street Financial Solutions principal and private client adviser Charles Badenach tells Professional Planner.
“You are able to control your destiny and focus on what is really important for the clients.”
The Hobart-based practice employs 10 people. It has three financial advisers, two of whom are principals and one who is completing the professional year program. The remaining staff members support the advisers.
“The main challenge that all businesses face in the current climate is recruiting new advisers to service the ever-increasing number of people that need advice,” Badenach says.
“As a small business, we have made the decision that we need to train from within… Technology has been a great leveller in that it enables small businesses to have access to the same resources and tools that ASX-listed businesses have without the bureaucratic structure.”
A bright future
Badenach believes small financial planning practices with efficient processes and systems that focus on their ideal clients and outsource where appropriate have a bright future.
“We can pivot and adjust to changing environments far easier than larger practices can,” he says.
“In addition to this, the pendulum has now swung with clients often preferring a professional, boutique, fee-for-service small financial planning practice.”
Brian May, managing director of Horizon Wealth Management in Sydney, is another planner who would like to believe his small practice will still be flourishing in 10 years’ time.
“We have a relatively young client base that continues to grow,” May says. “Our challenge is to constantly grow our human capital and continue to maintain our world-class operational platform.”
Horizon has three full-time and two part-time staff members. It has its own AFSL but outsources its compliance and has an independent member on its investment committee.
Pros and cons
May says the pros of running a small practice include the ability to make quick decisions and having control over your technology, workflow and content provided to clients.
Among the cons are the need to be able to leverage your infrastructure – premises, technology and back-office support staff – and that growth can be stifled by limited advice resources.
But May notes that if advisers wish to be self-licenced or operate on their own in the future, they will need some level of scale.
“They may have to consider merging or cohabitating with other advisers much like doctors share practices in order to leverage cost savings on rent, technology and back-office resourcing,” he says.
“They may also have to leverage knowledge from other advisers on client matters.”
Badenach believes the pros of running a small financial planning practice certainly outweigh the cons.
He says his business partnership with Rebecca Fergusson has worked well for the past nine years.
“I am lucky in that her strengths are my weaknesses and vice versa – we complement each other,” Badenach says.
“Having two principals has been a significant reason for how we have managed to thrive as it would be a lonely existence being a ‘one man band’.”
Badenach adds the main reasons for setting up the business was to “control our own destiny” and advise clients inline with their values.
“This environment has also enabled us to create a workplace culture that is different and unique,” he says.
“The only drawback we experienced was in the early days when we worked for no salary for the first 18 months, learning how to do things that you took for granted in a large corporate such as cleaning the office, building templates, establishing systems and processes, creating a website and so on. We have certainly developed a broader skill set working in a small practice.”
