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By Guy Holwill, Chief Executive Fairbairn Consult

Building a new financial advisory business is incredibly rewarding, but it’s also challenging, frustrating and even a bit scary.  You need to believe that you can create a world where tomorrow is better than today, which means that you’ll find that many of people who try to do this are optimists.  But more about that later.

Whilst some of the principles here are probably true for most industries, I’m specifically writing this for financial advisers who want to run their own businesses.  Although the capital requirements are (currently) very low, our industry is somewhat different to others because you need specific expertise and there are significant regulatory hurdles.  For now, I’m going to assume that you’ve covered the compliance matters because these are so fundamental.

Depending on your personality, you may find difficult to accept that you’ll need some luck and that you can’t control everything.  When we built Fairbairn Consult, we experienced this right at the beginning when we launched the business three days before the first COVID19 case in South African.

The first thing that you need is a clear vision of what you’re going to build.  You need to think big but understand that you can’t implement everything at once.  It’s like building a big house.  You start with the plans of the entire thing, but you build it from the ground up.  Depending on your resources, you may plan to build some parts of the house in future.

Once you’ve got your vision, the most important aspect of any new business is defining your why’s.  Why are you doing this?  Why would clients choose you?  Why would staff want to be part of your business?  Once you’ve got that clear, you can move onto all the who’s, where’s, how’s and what’s – the things that make up your unique value proposition that differentiates you from the sea of sameness.  Without this, you’ll struggle to attract and retain both staff and clients, and you’ll almost certainly end up in the race to zero by defining your value in terms of price.

Once you’ve built you proposition, you’ll need to create a business plan to see if it stacks up economically.  This is far more art than science because most of your assumptions are going to be wrong.  You can mitigate this to an extent by checking your assumptions with people who have experience of running brokerages.  But you also need to be aware that your bias towards optimism is probably going to result in you assuming that things will quicker than they will, and that you’re likely to overstate income and underestimate costs.

Your business plan is driven by your business model – so this is where you’re going to need to spend some time iterating the design.  We went through this process building Fairbairn Consult and there are two critical aspect that I believe that we got right.

The first is that we consciously chose to build the business as part of a bigger ecosystem.  By that I mean that we didn’t try to do everything by ourselves and that we chose to outsource functions to people who had a track record of solid delivery in those areas.  Think of this as being the conductor, rather than trying to build the entire orchestra.  This links to the second aspect, which is to keep overheads to a minimum until you’ve built scale.  By outsourcing the functions, we created variable cost structures, where the costs grew as the business grew.  By contrast, if we had large overheads from the outset, we would have been forced to chase revenue, and that would have resulted in us making short-term decisions and compromising the “why’s” that we set out to achieve.

My final thought is a piece of advice that I often give myself – that there is a fine line between innovation and chaos.  Your business will be much more successful if you fully implement 5 ideas than it will be if you partially implement 20 ideas.

Guy Holwill is the Chief Executive of Fairbairn Consult.  He is a qualified Civil Engineer and Chartered Accountant and has worked in financial services for more than two decades.  Guy is passionate about creating business models that thrive in the changing worlds of regulation and customer experience.

Fairbairn Consult is a licensed Financial Services Provider and a member of the Old Mutual Group.  The business started operating in March 2022 at the same as the world went into lockdowns.  By remaining true to the vision (the why), but being flexible on the how, Fairbairn Consult has grown to over 200 advisers in less than 3 years.