I was reminded this week that Financial Planning is much more of a profession than a business by the latest Charles Stanley results.

Like several others the company, perhaps best known in the past as a stockbroker, is investing millions in developing its nascent Financial Planning business but is still making losses, £5.1m in the last year, several million more than the previous year.

Losses rise at Charles Stanley Financial Planning arm

Despite this it is continuing to invest in Financial Planning, taking on more planners and backing the Financial Planning division, the smallest of its three divisions. Revenue is up 13% in the past year so it’s doing something right but Financial Planning profits will take time. As it says in its annual results, it is taking two years to see profits from a newly-recruited Financial Planner.

When it comes to Financial Planning patience is a virtue, as many will attest.

Charles Stanley is emblematic of many former stockbroking and other financial firms which have turned their attention to Financial Planning and wealth management. Many, such as Brewin Dolphin and others, are doing well and few of these larger firms have furloughed staff.

A recent study by City adviser and research company FinnCap suggested wealth managers would emerge quicker from the Coronavirus recession than most other sectors and I see no reason to doubt that. Financial Planning revenues will help this recovery.

Wealth managers ‘likely winners’ post-lockdown

Even so, building a Financial Planning presence will take time, as many large providers are finding and those who fail to understand this will struggle.

The profession relies on strong, individual, personal relationships and not the bulk-buying of funds under management. That makes it relatively hard to grow quickly except through acquisition.

I believe some wealth managers are waking up to this different approach rapidly and adjusting their pace accordingly. The pace of acquisitions of IFA and Financial Planning firms has barely paused during the pandemic and I do not expect this to change.

Acquisition alone, however, is not the best way to build a Financial Planning business. The quality of the planners and their training is key. They are the raw material for future growth.

Developing Financial Planning staff will take a lot of time and resources and investing in the profession will be a marathon and not a sprint.

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Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with 30 years experience.  This topical comment on the Financial Planning news appears most weeks.

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