Growth at 2plan but the future is challenging for financial services blog post page header image

Growth at 2plan but the future is challenging for financial services

Despite pandemic turbulence and the relentless challenges that resulted, 2020 was a year of further growth for 2plan Wealth Management. In this piece, CEO Chris Smallwood highlights some of the main assets that enabled the firm to weather the storm last year, and he voices his concerns about the future of an industry where the FSCS has become unsustainable.

Chris Smallwood Published 23/02/2021

2plan reported a strong year in 2020, following an incredibly tough few months and a lot of hard work from all the team. We haven’t furloughed any staff and we’ve managed to avoid any redundancies – in fact we’ve taken on more staff and we’ve achieved positive growth in turnover over and above 2019. We’ve also seen the highest number of advisers joining; we began 2020 with 231 businesses and came into 2021 with over 300 businesses, including a healthy pipeline of applications. We’ve seen real growth in a time when many businesses have unfortunately seen the opposite in a very challenging environment. It’s not been at all easy.

We continue to have a great culture at 2plan with adviser firms scoring us highly on the services and support we provide, enabling them to spend more time with their clients and leave the administration, regulation and technology to us. Alongside that, a big part of our stability over the last 12 months has been the fact we have always invested strongly in technology. Our advisers and their clients tell us that our Client Access Portal is second-to-none in the way advice and service can happen remotely in a secure and compliant way. It’s a tool that has really come into its own this last year. What’s more, we have our own IT company, which is a brilliant addition to our proposition. Together with extended use of Microsoft Teams this IT support has enabled our advisers to continue to do uninterrupted business with clients, where many other firms have struggled.

A happy 2plan adviser

We’ve run virtual induction courses as we’ve welcomed new advisers, which has enabled us to continue to support others with their career moves and professional development. It’s worked really well, and whilst previously it was great to invite all newbies up to Leeds to experience the head office culture and our home city for a few days, virtual meetings and training will inevitably become a permanent part of what we do.

Over the next year we’re investing across the board in further strengthening our proposition to attract new advisers, continue to retain the ones we have, and to enhance our investment solutions. Technology features highly here.

Looking beyond 2plan however, there are some serious industry-wide issues we need to address. Beyond this firm-specific success, the industry is in crisis. Despite the fact that there is a higher demand for professional advice than ever before, the financial adviser industry is shrinking at an alarming rate, with stringent regulatory requirements, pressure on costs, and a lack of investment in the profession to attract new graduates being key factors. Additional pressures brought about by Covid have added further strain.

The industry has become over cumbersome in many ways, and by and large the overall system is broken. The Financial Services Compensation Scheme levy is spiralling out of control and is one of the biggest threats. The forecast for 2021/22 is that the levy will be £1.04bn; a 48% increase on the previous year.

Our profession has been holding a white flag for years, asking for a better way to both protect consumers and safeguard the industry. We are reaching boiling point, with many firms now set to collapse. How does a company find significant money it just hasn’t budgeted for - an unexpected bill that can run into millions for some? The worst thing is, without significant and urgent change, the £1.04bn is likely to keep on rising year-on-year.

I’m concerned for our colleagues in the industry, for consumers, and for the financial health of the nation if we cannot find a new and better way forward - and we need to act fast.

I’ll discuss the FSCS levy in more detail in my follow-up piece ‘Can we find a vaccine to protect financial services?’ - due to be published in March.

About The Author
Chris Smallwood