Small and medium-sized enterprises (SMEs) are largely under served by financial advice firms, according to Simon Worden, managing director of business development consultancy Outbound Solutions.
There were 5.7 million SMEs registered in the UK in 2018 – a figure that will have increased in 2019.
Over 45% are registered for pay-as-you-earn (PAYE) and VAT, giving some indication of healthy businesses that aren’t just one-man bands.
By any accounts, a healthy potential pool of clients.
Outbound Solutions speaks with 1,000s of business owners every month, most of which aren’t receiving any form of professional financial planning or advice – other than some basic tips from their accountant.
Firms are also often in desperate need of financial support, they just may not know it.
So, it’s pretty apparent that targeting SMEs should be top of the agenda for financial advisory firms.
Messaging to the SME audience
There are many successful routes to market for financial advice practices looking to build their bank of clients; such as referrals, seminars, strategic relationships, good PR or online marketing, as well as the many quality lead generation partners out there.
All are proven ways to yield new clients.
But having a clear strategic message to appeal to a specific set of individuals, whether they are pensioners, senior executives, or industry-specific individuals, such as medial professionals, is pivotal to engagement and gaining a foothold in a sector.
Everyone wants to deal with a specialist who understands their challenges; so, demonstrating expertise and knowledge is a must.
Whoever advice firms are targeting, the key to engaging them is understanding what makes them tick and knowing what will add value. This is even more important when dealing with business owners.
Clear paths to delivering value
With so much to juggle, business owners often have very little time available to address the wider company financials; even less to focus on their own personal finances.
A good financial adviser can nearly always add real value to a growing SME business.
There will be some ‘quick wins’ – to use marketing parlance – rapid and tangible benefits that can be achieved immediately.
This might be something like structuring better remuneration strategies for shareholders, or advising on basic pension or tax allowances, even incorporating Carry Forward.
Understanding their plans for growth and their long-term aspirations: whether that’s to sell the business, pass it on through the family or even develop a plan for succession can be hugely important to a business owner, they thrive on advice that can help them achieve their goals.
The value that cashflow forecasting models can achieve by providing them with visibility of their personal finances and demonstrating how that links to their business goals can give clarity on that all important ‘magic number’ they need to reach for a comfortable retirement, can be invaluable.
Not to mention the merits of having a successful business owner as a client who will exit his or her business with substantial funds.
SMEs are receptive to advice
A recent survey by Legal and General of more than 800 SMEs found that financial advisers and other professionals were central to raising awareness about the importance of business protection policies, such as key person insurance and shareholder protection, with more than 84% purchasing policies when recommended.
This same research found that more than half of SMEs believed they would cease trading in less than a year if the key person becomes terminally ill, critically ill or dies.
Yet almost one third had not considered buying insurance to protect against this eventuality.
Thousands of SMEs remain unaware and, more worryingly, unprotected by any form of business protection.
Simple products like these can help a good financial planner get that all important foot in the door and start a dialogue with a business owner who, all too often, remains unaware of the value a good financial adviser can add to their growing enterprise.
Loyal, trusted clients
Many advice firms make the mistake of trying to be all things to all people, resulting in a muddled image that fails to deliver results.
Being strategic about your messaging: decide on your areas of specialism and expertise, then set about how you will reach your audience and what you can offer.
You must be able to resonate with your chosen market and show how you can deliver real value.
A vague, scattergun approach, trying to appeal to the masses, is unlikely to get you far.
Advice firms focusing their energy on the SME space that use the right channels to get their messaging across will benefit from lucrative new client wins in an ever-growing market, which is in need of quality advice and support.
This article was written for International Adviser by Simon Worden, managing director of Outbound Solutions.
