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Editor's note: financial planning can be big business

Can a business truly train a large number of financial planners who really ‘get it’, and maintain that quality across thousands of clients and dozens of offices?

Editor's note: financial planning can be big business

[UPDATED] How big is a big financial planning firm? Take Lighthouse. It has 400 advisers and an estimated £5 billion of assets under advice, but it is a mass-market proposition. The ‘adviser of choice to Middle Britain’ is subject to a £46 million bid from restricted national Quilter, which advises on assets of £110 billion across 1,600 advisers. St James’s Place topped £100 billion this year. But are these financial planning businesses?

I am talking ‘proper’ financial planning, which I would define as being somewhere close to the six-stage process set out by the erstwhile Institute of Financial Planning. Succession Wealth is an independent business that follows a variation of the six-step process. It has £7.75 billion of assets across a total staff headcount of 600, and 20,000 clients.

This week’s cover star firm Paradigm Norton seems small in comparison to the big beasts listed here. But with just one – notable but small – deal with another firm, it has grown over 18 years into a business with £1 billion of assets (with 65 staff, and 1,170 clients).

The business headed up by US financial planning guru Michael Kitces (he of the $150 per month planning fee), Pinnacle Advisory Group, has $2 billion under advice. In the US the average 'large' registered investment advisor firm is £2.7 billion. (Check out Citywire's research into the US advice market. Spirit of the Age: How RIAs are creating a new investment landscape.)

Size is not everything, not by a long chalk. But the question is scalability, and its limits. How can big advice businesses keep clients at the centre? Can a business truly train a large number of financial planners who really ‘get it’, and maintain that quality across thousands of clients and dozens of offices?

A solution is avoiding intermediation costs. Planning, without products, does not carry the same regulatory overheads, just time and expertise. Planning businesses that use technology smartly to help gather information and communicate with clients could deliver their services efficiently and cost-effectively to a wide demographic of clients.

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