Q1. Perform a size- up of the industry. Identify the threats or opportunities.
Answer:
Financial planning is one distinct segment among many within financial services industry. The aim of the financial planners is to assist people to maximize the potential of their financial assets. Financial planners evaluate a client’s goals, personal circumstances and risk tolerance to help them grow and preserve their wealth, minimize taxes , complete estate planning and determine insurance needs.
The financial planning has a prescribed six step process for financial planning outlined by FPSC(Financial Planners Standard Council).
The industry offers various products suited to different needs of the different customers. A variety of products like Mutual Funds, Guaranteed investment certificates(GIC) , Life Insurance and Retirement plans are popular.
The Revenue is generated through commissions and trailers. Additional revenue stream could be generated through life insurance sales and income tax preparation.
Approximately 50000-600000 individuals offered financial advice or sold financial products in Canada out of which only 17000 had a CFP Certification. The CFP(Certified Financial Planner) designation was monitored by the FPSC and assured a client of the credibility of the financial planner as the certification assured a client that the planner had a sound understanding of the business.
The future growth prospects for the industry were positive as a US study revealed that employment of personal financial advisors was expected to grow by nearly 35% by 2012.
The prominent players in the market included large financial corporations like Assante Capital Management, Freedom 55 Financial and Sun life Financial, small financial planners who operated their own businesses. Risk management, tax preparation and professional money management were some of the services offered by these players to the clients.
Threats:
The threats faced by the players in the industry:
• Due to the additional services being offered by the well renowned banks, there is a threat of losing high end customers. Even Mr. Gerald Young left Best Financial for the same reason.
• The industry works on trust and good personal relationships so if one big client leaves the company, other big clients might leave too and this would prove to be a big setback for the company if those clients contribute to a high percentage of the total assets under management.
• Transitioning clients from one advisor to another is difficult at a later stage could be problematic so proper planning in assigning clients to advisors should be carried out.

Opportunities
Some of the opportunities in the financial services industry are:
• More than one third of the certified financial planners were over 50 years old , hence, they may be nearing their age of retirement which would open the industry for new CFPs so that they can now handle the new clients.
• The various products of the financial planning industry were targeted towards baby boomers or blue collar employees so strategies and products could be developed with the target market as the young people below the age of 25.

Q2. Analyze Best Financial’s strengths and weaknesses. How will these corporate capabilities affect the growth strategy?
Answer:
The strengths and weaknesses of Best Financial are:
Strengths:
• In one of the biggest cities in Southwest Ontario, Sarnia had an average population of 70000 with the average age of 43.2 years which fell in their target customer segment, hence, their current focus on the clients in that age range was one of the strengths of Best Financial.
• The domain expertise of Linda Best was one of the main strengths of the company as she had about eight years of experience in the financial services industry. She got her CFP certification very early on in her career and had been assisting clients in making important financial decisions since then. Another employee, Mary Thompson had been in the financial services industry and had a thorough knowledge of Canadian and US Income tax and of mutual funds.
• Best Financial had formed good personal relationships with many clients and managed over 1000 financial plans. They had a sturdy client list with some of the clients, in the same household , taking more than one financial plan.
• Their revenues were increasing steadily and assets amounted to nearly $22 million in 2008. The net income was in tune with the revenues of the company.
Weaknesses:
• There was too much reliance on a single person and thus after a certain point, additions in the number of clients would be problematic.
• Since Best Financial Services Ltd is a sole proprietary concern, there is a lack of proper management framework since the entire gamut of company’s activities are handled by a team of three people. So, as such, there was no proper management framework as compared to the large financial corporations.
• One percent of the total clients have contributed to more than 20% of the total assets under management and the credibility of the company has taken a hit when one of the major clients falling under that bracket decided to switch financial advisors. This shows that if the company loses one or two major clients, their revenues as well as the profit figures would take a serious hit.
As it is mentioned in the weaknesses, there is too much reliance on a single person which would eventually limit the number of clients. Thus, it would be prudent for the company to hire a new advisor so that the workload can be shared between Linda Best and the new advisor
Since the company has to grow in the future, it has to focus on increasing the investment in advertising and promotion so that the reach is maximized.