The difficulty lies in getting from one place to the other. To make the leap, you need to invest in the overheads: the compliance overhead, the process overhead.
You need management with the skills and experience to manage not just dozens but hundreds or thousands of people. You need systems that will work across not hundreds or thousands of clients but tens or hundreds of thousands.
You not only need to make these investments, but to make them work; to have your advisers, paraplanners, administrators and managers successfully adopt them as if they were happily staying in a hotel, not involuntarily being forced to remain in a prison.
That is why so many firms get stuck in the middle, with all the costs of a large firm and few of the benefits.
Getting it right first time
Things look even more challenging in the world of the consumer duty, in which firms need to put client outcomes front and centre and ensure that value is delivered to each.
Older consolidation models where firms were perhaps bought for their revenue streams, with less attention paid to consistency of proposition, will be much more challenging.
Instead, you have to do what the Japanese car companies did, and what any well-run manufacturer does these days, and get your product right first time so that you know it will add value in the way you intended each time, every time.
To do that, you need technology to lighten the load; to build your proposition into your planning technology, independent or restricted; and to embrace a hybrid approach to digital in your client relationships, KYC process, planning and reporting.
As I have written before, Prod target markets offer a powerful framework here to help firms of all sizes deliver good client outcomes as well as the needed efficiencies.
You need your financial planning systems and processes to be as integrated and streamlined as possible with your back office so that as you add scale you can manage, monitor and measure your proposition, how it is being delivered and the outcomes it generates.
When you add a new adviser or firm, you need them to follow your processes and proposition – and that is where my hotel analogy comes in. Where firms considering selling to a larger group have so much choice, you need to be easy to work for, with a proposition that is easy to sell and easy to service.
