The practice of the future
30 June 2017
30 June 2017
Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.
What do you believe will be the main characteristics of leading advisory firms of the future? Eight planners provide their thoughts.
As the advice industry evolves, so too will the value proposition and the way we service clients. We believe that over time advisers will need to move their value proposition away from picking stocks, trying to predict markets and spending time on SOAs. This will be largely driven through advances in technology by automating process, driving down margins and helping to reduce inefficiencies that currently exist.
While technology does place a threat to our profession, it can also assist in being proactive, building scale, reducing total cost and improving interaction.
To be successful, it will be important to play to our strengths and the key strength advisers have over the advice driven by computers, is our ability to have empathy and build relationships.
To do this, we believe there will need to be a greater focus on gaining a thorough understanding of our clients, setting goals and establishing deep relationships with these clients, and delivering solutions that consider tax efficiencies and estate planning requirements.
Advice firms of the future will need to be great at providing pro-active communications and high quality advice, plus the use of technology will be critical in providing a superior client experience.
Customisation of both advice and investment solutions will also be even more critical to success. However, with customisation comes increased complexity and costs and it will be important to develop or utilise systems that provide this in a scalable solution that is competitive on price.
Ultimately, the successful advice firms of the future will be those that are open to change and technology. They will need to build superior relationships with their clients and drive outcomes that are customised to their individual needs.
Gone are the days of financial planning being a ‘cottage industry’. The business of the future will be a corporatised model. Systems and processes, checklists and procedures – actually, running a practice like a business, rather than a hobby, will be necessary for growth and evolution.
Face-to-face and deep client relationships will be the model of choice for some firms, whilst others might have a broader client base that is low-touch and high-tech. Regardless of the model, technology will be at the core to enhance the client experience and bring efficiencies to the business.
Our teams will be professional and many of the tasks they currently do will become automated or even outsourced, giving them the time and opportunity to add real value to the client and the business. The work environment will also be more flexible to attract and retain the best people.
Advisers and their teams will be highly educated and specialised. For example, we might have specialist retirement advisers who not only advise on strategy but also the psychology of retirement and behavioural finance.
The leading firms will be clear on their client offer – what do they do well and who do they serve. Focus and clarity regarding strategy and the choices made will be the norm, as will focus on implementation of the strategy.
Professionalism will dominate the landscape, and the conversation and voice of advice will be led by advisers, rather than institutions and product providers who, whilst are important players, are not the profession.
I think as advice costs continue to rise, advice will go two ways: high end, DIY or scaled in a one-to-many model.
It’s sort of like how fitness is – you can just have the gym membership where you are on your own, group classes which help to keep the cost down, or if you need extra help, there is personal training.
I think investment advice will become completely computerised and won’t be a way advisers add value.
If we are talking well into the future, I think tax and financial planning will merge. Essentially, one office and one person for both. Clients are time poor and are having more pressure placed on their time, so they just what one place to help get them organised.
This is already happening. Administrative jobs will be automated through technology or placed offshore as a way to stop the rising costs of advice.
You can already get a chartered accountant based in the Phillipines for $12 per hour or an SOA done in Pakistan for under $200. Whether you agree with this or not, it’s happening and I think it’s going to be a way to keep advice costs down.
I also think virtual financial planning will become the norm and advisers won’t have to be tied to just helping clients in a particular location.
Who knows, maybe in the not too distant future, we will be holding our meetings via virtual reality or I’ll be hologrammed into their living room.
As the growth in fintech continues and the traditional value propositions of financial advisers are commoditised and taken to the mass consumer via ‘robo advice’ tools, new business models will evolve around objective-based advice.
This is not simply goal setting, but rather a mandate to the adviser to ‘keep a lot of balls in the air’ while still managing their client’s money.
For the traditional retiree, paying fees to manage a diversified portfolio within the bands prescribed by the client risk profile, is about as exciting as watching paint dry.
What they will remember and be grateful for is the advice that allowed them to take holidays, renovate their house, help their children and retire earlier, while still providing for aged care and not running out of money before they die.
The advice firm of the future will use engagement tools that frame this conversation and illustrate how the adviser’s toolkit will assist new and existing clients achieve their objectives.
They will track and report on objectives set and achieved, as well as those still unfulfilled.
This will obviously include portfolio management but also cashflow tracking, estate planning and aged care, just to name a few.
The leading advisory firms of the future will do something exceptionally revolutionary – they will spend all their time with their clients.
Most financial planners right now run two businesses in one – an advice business and a compliance/paperwork processing business. Advisers try and see more clients, but that only results in an exponential increase in back-office paperwork.
I believe the business of the future will be one where all staff – whether advisers or para-advisers – spend 95 per cent of their time in front of clients. This is what the market wants, and indeed, is really the only thing they are willing to pay for. This is what advisers want, too.
The regulators, however, want you to do something entirely different. Until we are recognised as a proper profession – something that in my view will take at least a decade to manifest – they want you to not only fulfil the spirit but more importantly, the letter of the law.
They want those Financial Services and Credit Guides and Fee Disclosure Statements and Records of Advice churned out. They want you to consider and document every possible scenario that is reasonable.
Most of us didn’t get into this profession to fill in forms – we joined up to make a positive change in our client’s lives. But you can’t ignore the law, nor have a business built on quicksand.
How do you reconcile these competing demands? Simple, by finding quality specialist suppliers to outsource all back-office processing, so you can focus on your clients.
Going forward, the main characteristics of the leading advisory firms are likely to be:
In my view, the leading advice businesses of the future will offer personal, professional, unaligned, fee-for-service financial advice that is tailored to the needs of each client.
Adopting a one-size-fits-all approach will not be appropriate for those wishing to be seen as leaders in the profession.
There are four key features that leading advisory firms of today contain that are likely to be essential requirements for any advice firm if they wish to survive in the market of the future.
Knowing your clients extremely well is going to be paramount. If a firm knows its client well, then it can advise them well and meet their needs.
Service delivery also has to be very good. Client expectations have to be met. This is where great staff come in and team members who are fantastic at serving clients well.
Going above and beyond what the average firms do is also important. It means if advice and services can’t be provided in-house, then having trusted third parties that can be brought in to assist clients’ wider needs, are critical if you want to stand out from the crowd.
A learning culture in the firm is also another important characteristic to have. A learning culture is one where the team always looks to improve skills and knowledge with a view to ensuring clients are better advised and served.
Using technology to improve efficiency and using IT to provide better client outcomes is also vital.
Some firms may also choose to become specialists in a certain area and by doing so, they gain an edge over practices that work as generalists.
Engaging with clients better through the use of soft skills is another key to success. Capturing what is of value to the client and then delivering that value at the outset, will help a firm prosper overtime.
Finally, proper pricing for the work being undertaken is fundamental to success.
Getting paid adequately for great advice and service is going to ensure the practice can continue to hire, keep and train good people on an ongoing basis.
The practice of the future30 June 2017 What do you believe will be the main characteristics of leading advisory firms of the future? Eight planners provide their thoughts. Damon Bensein CFP®Head of Private Wealth, ElstonLicensee: EP Financial ServicesAs the advice industry evolves, so too will the value proposition and the way we service clients. We believe that over time advisers will need to move their value proposition away from picking stocks, trying to predict markets and spending time on SOAs. This will be largely driven through advances in technology by automating process, driving down margins and helping to reduce inefficiencies that currently exist. While technology does place a threat to our profession, it can also assist in being proactive, building scale, reducing total cost and improving interaction. To be successful, it will be important to play to our strengths and the key strength advisers have over the advice driven by computers, is our ability to have empathy and build relationships. To do this, we believe there will need to be a greater focus on gaining a thorough understanding of our clients, setting goals and establishing deep relationships with these clients, and delivering solutions that consider tax efficiencies and estate planning requirements. Advice firms of the future will need to be great at providing pro-active communications and high quality advice, plus the use of technology will be critical in providing a superior client experience. Customisation of both advice and investment solutions will also be even more critical to success. However, with customisation comes increased complexity and costs and it will be important to develop or utilise systems that provide this in a scalable solution that is competitive on price. Ultimately, the successful advice firms of the future will be those that are open to change and technology. They will need to build superior relationships with their clients and drive outcomes that are customised to their individual needs. Anne Graham CFP® LRS®CEO/Financial Planner, Story Wealth ManagementLicensee: SecuritorGone are the days of financial planning being a ‘cottage industry’. The business of the future will be a corporatised model. Systems and processes, checklists and procedures – actually, running a practice like a business, rather than a hobby, will be necessary for growth and evolution. Face-to-face and deep client relationships will be the model of choice for some firms, whilst others might have a broader client base that is low-touch and high-tech. Regardless of the model, technology will be at the core to enhance the client experience and bring efficiencies to the business. Our teams will be professional and many of the tasks they currently do will become automated or even outsourced, giving them the time and opportunity to add real value to the client and the business. The work environment will also be more flexible to attract and retain the best people. Advisers and their teams will be highly educated and specialised. For example, we might have specialist retirement advisers who not only advise on strategy but also the psychology of retirement and behavioural finance. The leading firms will be clear on their client offer – what do they do well and who do they serve. Focus and clarity regarding strategy and the choices made will be the norm, as will focus on implementation of the strategy. Professionalism will dominate the landscape, and the conversation and voice of advice will be led by advisers, rather than institutions and product providers who, whilst are important players, are not the profession. Adele Martin CFP®Managing Director and Senior Wealth Adviser, Firefly WealthLicensee: RI Advice GroupI think as advice costs continue to rise, advice will go two ways: high end, DIY or scaled in a one-to-many model. It’s sort of like how fitness is – you can just have the gym membership where you are on your own, group classes which help to keep the cost down, or if you need extra help, there is personal training. I think investment advice will become completely computerised and won’t be a way advisers add value. If we are talking well into the future, I think tax and financial planning will merge. Essentially, one office and one person for both. Clients are time poor and are having more pressure placed on their time, so they just what one place to help get them organised. This is already happening. Administrative jobs will be automated through technology or placed offshore as a way to stop the rising costs of advice. You can already get a chartered accountant based in the Phillipines for $12 per hour or an SOA done in Pakistan for under $200. Whether you agree with this or not, it’s happening and I think it’s going to be a way to keep advice costs down. I also think virtual financial planning will become the norm and advisers won’t have to be tied to just helping clients in a particular location. Who knows, maybe in the not too distant future, we will be holding our meetings via virtual reality or I’ll be hologrammed into their living room. Gil Gordon CFP® AEPS®Proprietor and Senior Adviser, RI Lower HunterLicensee: RI Advice GroupAs the growth in fintech continues and the traditional value propositions of financial advisers are commoditised and taken to the mass consumer via ‘robo advice’ tools, new business models will evolve around objective-based advice. This is not simply goal setting, but rather a mandate to the adviser to ‘keep a lot of balls in the air’ while still managing their client’s money. For the traditional retiree, paying fees to manage a diversified portfolio within the bands prescribed by the client risk profile, is about as exciting as watching paint dry. What they will remember and be grateful for is the advice that allowed them to take holidays, renovate their house, help their children and retire earlier, while still providing for aged care and not running out of money before they die. The advice firm of the future will use engagement tools that frame this conversation and illustrate how the adviser’s toolkit will assist new and existing clients achieve their objectives. They will track and report on objectives set and achieved, as well as those still unfulfilled. This will obviously include portfolio management but also cashflow tracking, estate planning and aged care, just to name a few. Patrick Canion CFP®Chief executive officer, ipac Western AustraliaLicensee: Charter Financial PlanningThe leading advisory firms of the future will do something exceptionally revolutionary – they will spend all their time with their clients. Most financial planners right now run two businesses in one – an advice business and a compliance/paperwork processing business. Advisers try and see more clients, but that only results in an exponential increase in back-office paperwork. I believe the business of the future will be one where all staff – whether advisers or para-advisers – spend 95 per cent of their time in front of clients. This is what the market wants, and indeed, is really the only thing they are willing to pay for. This is what advisers want, too. The regulators, however, want you to do something entirely different. Until we are recognised as a proper profession – something that in my view will take at least a decade to manifest – they want you to not only fulfil the spirit but more importantly, the letter of the law. They want those Financial Services and Credit Guides and Fee Disclosure Statements and Records of Advice churned out. They want you to consider and document every possible scenario that is reasonable. Most of us didn’t get into this profession to fill in forms – we joined up to make a positive change in our client’s lives. But you can’t ignore the law, nor have a business built on quicksand. How do you reconcile these competing demands? Simple, by finding quality specialist suppliers to outsource all back-office processing, so you can focus on your clients. Rebecca Fergusson CFP®Principal and Private Client Adviser, Main Street Financial SolutionsLicensee: Fitzpatricks Private WealthGoing forward, the main characteristics of the leading advisory firms are likely to be:
In my view, the leading advice businesses of the future will offer personal, professional, unaligned, fee-for-service financial advice that is tailored to the needs of each client. Adopting a one-size-fits-all approach will not be appropriate for those wishing to be seen as leaders in the profession. Wayne Leggett CFP®Principal, Paramount Financial Solutions
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