Advisers: you wouldn’t tolerate this for clients, so why do you continue to do it yourselves?
Written by: Nick Ryan, CEO
As advisers, one of the first conversations you have with clients is about income and expenditure. Where is money being wasted? What costs no longer serve a purpose? Yet many advice firms tolerate inefficiencies in their own businesses that they would never accept for clients.
Subscription sprawl is a growing example.
Key Points
- Subscription costs are widely underestimated
- Behavioural bias makes cancelling harder than signing up
- Advice firms accumulate software tools in the same way individuals collect subscriptions
- Each tool solves a problem in isolation, but few firms step back and review the whole
- Switching feels painful, even when inefficiency is obvious
As IFAs, one of the first things we would talk about with clients would be income and expenditure in its broadest sense. Essentially, where could your client cut superfluous costs?
And nowadays, one of the key drifts at every income level – not just those at which we IFAs would be engaging with people – is subscription proliferation.
I’ll not name names, but think about that streaming service you signed up for to watch one specific show and then forgot about. That online magazine subscription, because you promised you’d read every lunchtime rather than doomscroll. Or the now-timeless classic, the gym membership that quietly outlived January.
Fascinatingly, people often don’t even realise how much they’re paying for subscriptions until they check their accounts (or are asked to): a research paper found that 90% of consumers underestimated their total monthly subscription spend. And worse, the real amount they were spending was three times higher than they thought. When a change in payment method forced users to review subscriptions, cancellation rates spiked across every service.
That inertia isn’t simply laziness; it’s behavioural. Psychological quirks like loss aversion, the endowment effect, and status quo bias mean people are more motivated to avoid losses than to pursue equivalent gains, so the idea of cancelling feels like a loss even when it’s rational to do so.
And the services you’re subscribed to know it. Auto-renewals are now normalised, and cancellation mechanisms are designed deliberately to be friction-filled, making it infinitely trickier to get out than to sign up. It’s no wonder subscriptions stick even when value fades.
What was it The Eagles said? “You can check out any time you like, but you can never leave…”
And let’s be real – even we IFAs are doubtless guilty ourselves at a personal level. How many of us finished The Bear months ago, and yet…
But worse than that, we’re guilty of it at the level of our advice practices. I’ve had a sneak preview of some research by the lang cat which shows the number of separate software subscriptions advice firms are paying for. I can’t reveal that number right now, but trust me – it’s sobering.
Over time, practices are accumulating software in much the same way as individuals accumulate streaming subscriptions. Tools added to solve a specific problem, another layered on for compliance, another because “everyone else uses it”. Each decision made sensibly in isolation, but rarely revisited as a whole.
This is not a holier-than-thou piece, though. On the absolute contrary, it’s the opposite. When we totted them up at our own practices, both myself and my co-founder at Pilot were as surprised as you might be if you cared to count them.
It’s one of the many reasons we built Pilot – to consolidate the lot into one package, hence one subscription. (And point of order and indeed principle – that’s as easy to leave as it is to join.)
And unsurprisingly, it’s one of the key problems we’ve encountered in our story so far – switching feels painful: data migrations, retraining staff, fear of disruption, and so on. In short, the friction of change often outweighs the drag of inefficiency.
Be honest: you’ve had this conversation before – just not with yourself.
