But what about succession? If the adviser wishes the business to carry on, can protection help?
Succession planning and the adviser
For advisers looking to bring new blood into the industry, there is already an uphill challenge. Since the Retail Distribution Review (RDR) of 2012, the number of financial advisers in the UK has diminished.
An academic report from Cass Business School in 2013 found that adviser numbers fell from 40,000 at the end of 2011 to 31,000 by the start of 2013.
The report at the time was not entirely positive that the market would rebound. It states: “We find the remaining financial advisers are unduly optimistic about their own business prospects in the RDR world.
“However, we believe changes in the industry have as much to do with unfolding technological and competitive forces as with RDR itself.”
Indeed, since then we have seen the rise of robo or hybrid advice, with more offerings coming to the market from the US and Europe; an increase in the number of direct-to-consumer investment sites, persistent consolidation among both providers and adviser-distributors and a return to the low-level advice market from the banks, such as RBS and HSBC.
There is a lot of competition out there for advisers’ traditional client base, and if a firm wants to maintain and grow not just over 10 years but the next 30 or 50, then succession planning is a business imperative.
Protection can help with succession planning – not just for financial advisers, of course, but also for the clients whom they advise.
Ms Thomson concedes: “If a conversation starts about succession, then ownership protection is the important back-up plan, for death or critical illness.”
Early exit (buy-out) or retirement of the senior director or business owner are other factors which can be planned for, but the death or accident or sudden illness of the key people or the business owner cannot be planned for.
“This is why protection should always be considered,” she says.
simoney.kyriakou@ft.com
