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You might’ve spotted a cheeky LinkedIn post from us yesterday, following the news that another compliance provider has hiked their prices this week. Group forums (and our inbox) were full of frustrated advisers complaining about increases of up to 200%, with very little notice before implementation.

Our tongue-in-cheek post aside, this does warrant looking into a bit further. The strategy that is, presumably, being applied is not a new one; the theory is that a price increase will see a number of clients who do not wish to pay that level leave, but a number of clients will stay and pay the new level, and if all goes to plan you have fewer clients but with the same (or maybe even higher) revenue. This can simply mean higher profits, or it can give breathing space to be able to enhance the service when margins aren’t so tight.

Plenty of businesses have done this successfully in the past. Just last week, the company that owns Tinder confirmed that the dating app’s customer-based numbers have fallen by 6% on the back of the recent price increases, but the move boosted the app’s revenues by 10% (to $508m in the 3 months to September in case you were wondering).  It’s a tried and tested move, but that doesn’t mean it’s foolproof. There’s no way of knowing, with absolute certainty, which clients will stay and which clients will go. I’ve witnessed other businesses attempt this and have a bigger backlash than expected which resulted in them backtracking and allowing the original pricing to stay.

A mix of client sensitivity and also market sensitivity is at play. If firms are already feeling the pinch, their team are asking for pay increases because of the cost of living, rent, rates and utilities are all increasing, is now the best time to attempt the fee increase manoeuvre? I guess there’s only one way to find out.

However, there’s another factor to consider here. When I’m looking at our services across The Verve Group, my constant challenge is “How can I get our prices lower?”. We know there are pressures on fees across the entire advice process. We know less than 10% of people in the UK can afford financial advice. I personally believe it’s on every part of the chain to look at what they’re doing, harness tech and AI and efficiencies and look to make it as cost-effective as possible. Yes, profits are essential. But so is the ability of the industry to continue and perhaps even grow, and therein lies the tension. Probably easy for me to be on my soapbox when I don’t have external shareholders demanding ever higher returns, but to help more people get advice is the entire mission of Verve, and so is the stance we would take regardless.

Anyway, I find business dynamics and the laws of supply and demand and customer psychology and all that malarkey super interesting so will be keeping a close eye on how things play out. Speaking of compliance, we’ve made a bunch of new hires and promotions to our compliance team (smooth, huh?) which you can read about below, along with our 2024 kick-off extravaganza.

Also, we throw a flipping good conference here at Verve, if we do say so ourselves, but I have to say that the Adviser 3.0 conference is shaping up to be an absolute belter (Toby Anstis. Enough said). Early bird tickets finishing soon, link below.

Having made around 100 wine recommendations over the last couple of years, I think the time has come to change things up (even my wine knowledge isn't that extensive). Instead, let me leave you with an interesting fact. 

We live closer to the time that T-rex's roamed the earth than they did to the time in which the stegosaurus lived. You're welcome.

Welcome back, everyone. I really hope 2024 is an absolute corker for you all and looking forward to seeing some lovely faces soon. In the meantime, have a wonderful weekend all,

Meet: the compliance team upgrade! 😉

Discover: how we start a new year in style at Verve.

Listen: to everyone’s favourite Heart radio DJ spin the decks after a day of learning.

Our brand-new business dashboard - Dextera™ - is already part of the day-to-day life for over 1,500 financial planning professionals. Don't get left behind - try it for yourself too.