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A Business Plan – Still a very useful document

Published: June 11, 2013 by Fundhouse

A Caveat

Most businesses do not have a business plan and there is often a good reason why: in large part, businesses evolve in an oblique way, through trial and error, rather than because they stuck to a clearly defined business plan they documented with consultants on day one.  However, while this is a great reason, we do think that a business plan is useful in another way – not necessarily only to look around corners. It makes you think things through and to test yourself and acts as a way of including and motivating others (like staff).  This is why we think a business plan should be created.  Our goal is not to help you draft a business plan, but to motivate you to start one.

Your practice – running it like a business

Financial planners are part of a noble profession:  they aim to help their clients prosper and live well in their retirement years by dispensing meaningful advice to their customer over time.  But being a financial adviser is also about running a successful business – any business needs to consider ways to attract and retain clients and quality staff, and to build an ethic and set of values that encapsulate the brand.  It is no different to any other profession: partnerships of lawyers, accountants, engineers and fund managers all have to make sure they have a stable business in order to be able to add value to clients.

We can also extend the business issue further: practitioners, such as financial advisers, also need to consider their own retirement which usually means that one day they would like to realise the value of their lifelong investment in the business.  This adds to the need to plan today, with this deliberate goal in mind – particularly in a business that is likely to have key man risk.

The format and formality of business plans

A quick internet search will also show that there are as many business plan formats as the time you have available to search for them.  Practitioners should not be put off by this; instead they should start with something that makes sense for their business.  One can use the templates available online or even something like excel or PowerPoint, because invariably you are going to need to present your plan to staff, partners or possibly investors. Whatever the format, the key thing is to get started and develop it as you go, something is better than nothing.

Ideally the business plan should cover the following areas

USP – this is one of the few useful consulting terms in the market: a unique selling proposition.  What is yours?  Why should a client come to you and not someone else?  And what is unique and different about you?

Values – what are your business values and core tenets?  This can easily be dismissed as a philosophical point, but when you look at successful businesses you tend to find they have a clear set of values.  These help define how you treat clients and staff, whether you take near term or long term decisions and how you wish to be perceived.  It also helps with recruitment.

Invest in Brand – brand is crucial when you are selling trust and credibility. It also helps in making the business bigger than any individuals.  Building a brand is a combination of internal actions and behaviours (servicing clients, your values etc.) and external actions (being visible from a marketing perspective). Brand is also central to your clients gaining confidence in you.  What is your brand strategy?

Business Goals – the immediate, near term, medium term and long term goals of the business are crucial.  Where are you today and where do you want to be when you retire?

Clients – most businesses will take on almost any clients in the early days.  But in reality, are these clients the ones you are wanting over the long run?  By giving some thought to the ideal clients, you can purposefully work toward gaining these types of clients over the long run.

Products/ Services – these tie into your ideal client consideration as well as your USP (value proposition).  What services are central to your USP and what needs to be your focus for the long and short run?

Fees – a business with a solid value proposition seldom has to worry about being too flexible on fees.  The old adage applies: fees need to relate to value received.  With financial advisers, fees are very difficult to predict given regulation. Our sense is that there is a major competitive advantage to be gained by having a fee structure that is  a) fair, b) transparent and c) immune to regulation.

Business Partners – it is worth reflecting on those parties that you are deeply reliant on.  Are they aligned with your values and the way you are positioning your business?  Are you able to operate in the way you want to, given these partnerships?  Do they aid your independence or impede it?  Who are your ideal partners and why?

Scale – scale is achieved when you can take on more clients and your costs increase very little (if at all).  Scale is very difficult to achieve in a professional service business that relies on client face time.  But there are ways of achieving this in some way.  Is your business aiming for scale?

Regulations – this is an atypical requirement for a business plan, but it’s highly relevant to financial advisers.  The regulator seems to follow international financial services regulation (such as the RDR), so an adviser would do well to position themselves today for regulation that is likely in future.  There seems to be two binary business paths to follow based on regulatory trends: an independent business or a tied (or semi) tied business.  The former is likely to gain most from regulation, while the latter is being clamped down.

Cashflow – no business plan is complete without a goal for creating financial value through time.  What do you expect your costs to stabilise at through time?  Your revenues?  What services will be sold and in what mix?  Part of this needs to be an evaluation of resources – from staff, capital/ money, systems, insurance and premises, licences etc. These are practical issues determined by the needs of the business and will change as the business grows and each impacts cashflow.  Identifying them and planning for them means that they can be applied when appropriate and at a reasonable cost to the business.

Review, update and adapt the business plan

Business seldom evolves perfectly (as planned), so it is important to review the business plan from time to time, adapt it and update it where necessary to reflect any changes.  It is also encouraging for the practitioner to see how they have progressed over time versus their goals – further spurring them on to reach their future goals.  This is also a very useful document to share with your staff and other stake holders.

In conclusion, while some popular theories regard business plans as a waste of time (and we agree at times), the business plan remains a tried and tested tool for business owners to orderly plan for the anticipated growth in the businesses.  There is also much to be gained by being forced to think things through.  Good luck!


Participants in the Fundhouse Adviser Programme will be encouraged to develop a business plan over the next 18 months, we regard this a very useful tool for advisers to structure the their goals and to provide a clear course of action on how to go about achieving their goals. Under our resources section of Adviser Online you will find a business plan template similar to the one we will be using on the Adviser Programme.