‘We have achieved the perfect balance with our self-employed model’
Foster Denovo’s self-employed model has seen some firms grow up to 40 per cent in the first two years, according chief executive Roger Brosch.
Speaking to FT Adviser, he discussed how being self-employed can give young advisers entering the industry a great opportunity to grow and succeed.
He said: “This is a sector where you can progress quite quickly, particularly within the self employed model, where we’ve seen a lot of growth, not just in numbers, but in people, growing quickly.
We charge them a bit for it but if you can grow 40 per cent more then that makes up for it.
“We’ve had people join us with very few clients doing £50,000 to £60,000 a year, and within five or six years, they’re doing £500,000 or £600,000 and looking after 200 clients.
“There’s not many practices that you could see that sort of growth unless you’ve got the right support so for the more entrepreneurial individual, it can be a great opportunity to grow and succeed.”
Brosch discussed how roughly 40 per cent of Foster Denovo revenue came from self-employed advisers and it was constantly looking to recruit more.
“We provide a really good balance between supporting the entrepreneurial advisers who want to have a little bit of autonomy and build their business in their own way, but plugging into something that does it all for you, so you don’t have the risk.”
He explained that advisers are inclined to do it in their firm’s way but said that is “a minor give up” if it is being done for them,
However, he said the way advisers can build clients and the type of them, that decision remains with them.
“There are self employed advisers who come to us, going, ‘If only I could give all of that stuff up.’ And it is predominantly HR, IT and regulation they are talking about,” he explained.
According to Brosch, if self-employed advisers gave up those three things for a decent sized self-employed practice, advisers would get 40 per cent back of their time.
“Now you can either spend that practicing your golf swing, or you can spend it growing your client opportunity.
“We tend to find that when self-employed advisers join us, they grow 30 to 40 per cent in the first two years, and that’s purely because we’re taking away all of that stuff.”
He added: “Now we charge them a bit for it but if you can grow 40 per cent more then that makes up for it.
“We’re not saying you’re just joining a network and we don’t do very much for you, and you don’t pay us very much. We’re saying, you pay for a lot, but we do a lot for you, and you can thrive here and it’s attracting a lot of interest.”
Brosch discussed how being vertically and laterally integrated across all its propositions allows it to retain business.
The firm runs self employed and employed models alongside each other in a hybrid manner.
“I’ve had some people who’ve been employed running books for us for 10 to 15 years. They get to their 40s, and they suddenly go, ‘Do you know what I want to try this for myself now’,” he said.
“I can say, ‘Fine we will hand those clients you’ve been looking after to somebody else, and you go into our self employment model. Have a crack.
“And if you can do it, then great. If not, there’s always a place for you to come back’.
“So we can attract everybody who wants to come, and we don’t have to lose anybody.”
Advice gap
Brosch believed it was genuinely possible with digital capabilities to serve people in the advice gap.
He argued that it was particularly important for Foster Denovo as it is acquiring businesses with clients who are at the lower end.
“When you sit there helping them understand through financial education programs and wellness programs, that there are things that they should be doing, you need to be able to provide a solution for them to better act and transact,” he said.
“This is where actually the full advice process is still expensive to deliver, and that’s not going to change very quickly.”
Slowly but surely, it is becoming more affordable but digital is a critical part of helping bridge that advice gap, particularly for the younger generation, and particularly to help with the wealth transfer we are starting to see,” he added.
Brosch saw the firm’s digital capability sitting alongside all its other propositions and said it will be an “underpin of support” to the advice process, not necessarily purely a channel on its own.
“In the next five to 10 years, we’ll see that sort of working alongside as a key way of bridging the advice gap in the sector,” he added.
alina.khan@ft.com
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