It has been fundamental to the development and reach of AZ-NGA in Australia and now the company’s outsourcing specialist, Vital Business Partners, has developed a new white paper aimed at explaining how advice firms can scale up.
And that white paper argues that “the biggest risk inside most advice businesses is “principal dependence” with the most successful businesses having made the advice relationship transferable between advisers and support staff”.
It says the average advice business has too much knowledge residing inside a principal adviser’s head.
The white paper, From cottage industry to professional companies: VBP’s guide to scaling with confidence, says that fast growing firms often encounter significant challenges, including declining earnings, in the initial stages of scaling up because they don’t have the resources and capability to manage the complexity that comes with running a larger business.
“However, this trap is avoidable if founders can develop their leadership skills or bring in leaders with the right experience and skillset, the guide claims,” it said.
Vital Business Partners chief executive, Nathan Jacobsen, who is also chief operating officer of AZ NGA pointed to the white paper stating that scaling up had the potential to deliver many benefits for advice firms including operational and cost efficiencies, better access to capital and a more structured approach to growth.
But he acknowledged that it was not for everyone,
The white paper points out that, arguably, the biggest challenge of scaling is overcoming a small business mindset in circumstances where such an approach represents an inhibitor.
“The small business mindset says, do everything yourself or hire friends and family. It’s the reason why principal advisers can often be found lurking in the back office,” it said.
“The small business mindset fails to adequately recognise that everyone has a natural ceiling: a certain level at which their knowledge and ability plateaus. Trying to progress beyond that level is not only ineffective but often dangerous because it exposes businesses to risk.”
Under the heading “making yourself replaceable” the VBP paper said that, right now, there is an enormous opportunity for advisers to scale their businesses and make advice accessible to more people.
“If your mission is to scale up and corporatise then the ultimate goal is removing key person dependency,” it said.
This article was originally published by Financial Newswire and can be accessed here.
For more information, please contact:
Leng Ohlsson
Splash Content
M: 0409 509 516
E: leng@splashcontent.com.au
W: www.splashcontent.com.au
