Money that you take from the business to cover your own personal living expenses is known as 'Drawings'. This should not be included here, but will be dealt with elsewhere in the cash flow.
Depending on the size of your practice you may not need any staff - many IFAs work alone. However, larger businesses require various support staff and other qualified advisers. Before you can make an estimate of any wages you will pay each month you will need to identify the work that must be done and how many people will be needed to do it.
You may need staff to do things like:
- meet clients, undertake a 'fact find', establish the most suitable products for their needs
- obtain quotations, arrange policies and produce disclosure documents
- keep the business records
It is very important that your staff have good communications skills and that they are well trained. Don't forget that only approved persons are allowed to carry on activities regulated by the Financial Services and Markets Act. You will need to assess your employees regularly and put in place appropriate training programs to bring employees up to the required level of competence and to ensure that this is maintained. The Training and Competence Sourcebook, downloadable from the FCA website, contains guidance on training matters, including keeping proper records of recruiting staff and checking that they have the right qualifications.
You might decide to take on one or more paraplanners - these support and work with financial advisers but don't meet clients or give advice. You can find out more about a paraplanner's role on the Professional Paraplanner website.
The wages you pay your staff will depend to some extent on what is the going rate in your area. The Annual Survey of Hours and Earnings (ASHE), which is carried out by the government, gives average weekly wages (national and regional) for a wide range of different types of job. The Survey is available online on the Office for National Statistics (ONS) website.
- you could use a combination of full and part-time staff
- the National Minimum Wage Act sets a minimum amount that you must pay your staff. Workers aged 25 and over receive a Living Wage premium on top of the standard National Minimum Wage
- there is employment legislation that you should be aware of
- you will have to pay employer's National Insurance Contributions (NICs) and you will have to operate PAYE in 'real time'. You may have to make employers' minimum contributions to an auto-enrolment pension scheme too
In the cash flow, just put the amounts you will actually pay to staff after you have deducted NICs and PAYE - you will show these separately. You should also include here the cost of staff pensions.