Advice companies can operate a number of business models, fee structures and client strategies, but for Lumin Wealth's Martin Cotter, competitive fees and a personalised service are key to achieving profitability.
Lumin Wealth is a chartered independent advice business that was founded in 2010 and since then has amassed £860m in assets under management.
In May 2021, after 10 years of growth, it received backing from Swiss financial services company VZ Group.
Cotter, founder and managing director of Lumin Wealth, chats to FTAdviser In Focus about what makes an advice business profitable and why he believes vertical integration is a must.
FTA: What is your idea of a profitable advice business?
MC: Firstly, it must be profitable for both the client (giving cost-effective advice) and the business. It also needs to be profitable for staff in terms of personal and professional development, enabling them to enhance their skills and knowledge.
Lumin’s adviser academy for graduates provides a pathway into the industry for aspiring advisers, and delivers a pipeline of future adviser talent for the company.
FTA: What business models do you think work best to achieve profitability?
MC: A personalised service is key, but the foundations of this need to be built on a team-wide approach, with vertically integrated solutions and services.
Our own business model provides integrated financial planning and discretionary investment management services but, crucially, the investment services are independent.
This means there is no potential conflict of interest, as can be the case with some providers who may seek to promote or distribute their own products. Clients undoubtedly appreciate this distinction.
When incorporating both financial planning and investment management services we find a percentage fee approach works well, as long as it is competitively priced.
FTA: What is Lumin's philosophy for what makes a good advice business?
MC: We believe in a modern, forward-thinking structure, with services that cater to client needs, rather than ones that are implemented simply to increase profitability.
Our staff are personable people and humour plays a part – we are able to build great relationships with clients because we provide a genuinely personal touch.
A lot of people find the prospect of financial advice daunting, due to a lack of understanding, or inertia in the face of perceived complexity.
In reality, partnering up with a financial advice business is an easy step to take. Keeping advice simple and as straightforward as possible is the key.
Whether you are dealing with a senior financial executive, or a consumer with little to no financial knowledge, clients crave simplicity – and that is what we provide. In a nutshell, it is financial planning made easy.
FTA: Is the cost of regulation the hardest thing to overcome?
MC: While regulatory fees are no doubt challenging for small businesses, for a larger company like Lumin it is a normal part of a professional business set up.
