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FINANCE: GCI Wealth Tour Unlocks the Future for Financial Advisors


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Financial advisors face critical challenges. If they continue to follow traditional strategies, they are unlikely to be able to maintain profitability over the medium and long terms, says Alex Cook, CEO of GCI Wealth.

“The number and scope of challenges that financial advisors face means that business as usual is becoming less viable now, and will dramatically reduce their chances of success into the future,” says Cook. “Financial advisors simply have to take a fresh look at their businesses before it’s too late. GCI’s forthcoming Wealth Tour will offer financial advisors some new thinking about how to overcome their challenges, position themselves for greater profitability—and create a succession plan that preserves their income.”

Cook says that among the greatest challenges facing independent financial advisors are the Retail Distribution Review (RDR) and its implications, the need to improve margins in an economic downturn with the headwind of rising legislation and, critically, how to turn a Financial Advisor’s practice into a business in order to preserve cash flows into retirement.

RDR will raise the bar on the quality of advice that advisors give their clients. With hundreds of thousands of investment vehicles to choose from globally, independent financial advisors simply do not have the expertise or time to research them all in order to create the right portfolio mix for each client. At the same time, they have increasing administrative burdens relating to compliance and client reporting, which further reduce the time available to spend with, and on, clients.

In addition, few financial advisors properly account for the time they spend on administration and buying in services. Cook says that the average independent financial advisor is actually only achieving a margin of around 40 percent before drawing a salary.

GCI has developed an offering that addresses these challenges. By becoming part of the GCI group, independent advisors can access highly specialised asset consulting services, and benefit from centralised, cost-effective administrative services, including easy client reporting, client relationship management and asset liability modelling, to mention just a few.

“This means that advisors can spend more time servicing their clients, and have the support to improve their value-add,” Cook observes. “On the other side of the equation, economies of scale means that they can actually increase their margins, and so maximise profits.”

But perhaps the biggest challenge for independent advisors is an exit strategy. Advisors and their dependents are used to a certain lifestyle which can never be maintained by the relatively small capital sums the sale of the practice will raise. This is where Cook believes GCI has really changed the game by creating a model for a succession plan that preserves the advisor’s wealth.

“It’s all about helping the independent advisor to move from being one-person band to a real business that can go on producing income after he or she has exited,” says Cook. “We have done this successfully for several advisors, so we have a model that really works.”

The GCI Wealth Tour will visit Port Elizabeth, Knysna, Cape Town, Johannesburg, Durban and Pretoria between the 20-28 July. Late morning sessions will be aimed at financial advisors while afternoon sessions will be suitable for clients. Topics covered will include The Future of Sound Practice Management, The Future of Portfolio Construction and The Future of Technology. Speakers will include Alex Funk, Head of Asset Consulting at GCI; Brian Foster, Co-Founder of Beyond RDR: Helping Advisors Transform their Businesses; Steve Watson, Investment MD at Investec Asset Management; and Daniel Levy, an attorney and entrepreneur who recently sold his Internet advertising business for R350 million.

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