The Macquarie 2018 AFS Benchmarking Report shows that high performing practices are concentrating on three core areas: clients, staff and systems.

In an ever-evolving advisory landscape, the traditional role of the adviser is changing. Today, more emphasis is being placed on client relationships and soft skills (48 per cent), with one-third (35 per cent) of planners believing there is an increasing need for them to be more resilient and adaptable to change.

These were two of the key findings to come out of the Macquarie 2018 AFS Benchmarking Report, with 11 per cent of advice firms reporting there was an increasing need to become a specialist, and only 6 per cent saying there is a greater need to focus on technical skills.

“What will it take to be an advice firm of the future?”, asked Sherise Mercer – Head of Macquarie’s Virtual Adviser Network. “The Macquarie 2018 AFS Benchmarking Report shows that high performing practices will be concentrating on three core areas: clients, staff and systems.”

1. Clients

Speaking at a recent industry conference, Mercer said the report showed a clear separation between high performing benchmark firms (surveyed between November and December 2017), compared to a wide variety of firms surveyed throughout 2017.

“We asked planners what they believed were the most effective strategies to improve profitability

in the current market, and 68 per cent of the benchmark firms said, ‘Adding value to existing clients’,” Mercer said.

According to the report’s findings, in terms of focusing on what matters to clients, firms were placing greater emphasis on personalising the experience for clients, with 74 per cent of the firms recording an increase in client referrals as a result.

“High performance advice firms are improving their profitability through referrals,” Mercer said. “They are doing this by ensuring they clearly articulate their value proposition, are generous with their time in educating their clients, and when it comes to asking clients for referrals, they know who to ask, when to ask and how to ask.”

She added that advice firms were preparing for future growth by actively engaging with the next generation of clients. The research found that 82 per cent of benchmark firms engaged with the adult children of their current client base, compared to 67 per cent of all firms.

“The research shows us that the next generation of clients want their planner to be able to identify their needs and connect them with other professionals, like accountants, to help them with their money management. They also want a responsive service, with speed and efficiency of implementation.

“And the next generation are telling us they want information and education from their planner about their investment portfolios. In fact, twice the average want more education and portfolio-specific communication from planners.”

2. Staff

When it came to improving their business profitability, the retention of high-performing staff was also an important consideration for 64 per cent of the benchmark firms. And while staff remuneration was also an important factor in retaining staff, the research found that 78 per cent of high performing organisations were also using workplace flexibility, training opportunities and a positive workplace environment, as important inducements for rewarding and retaining staff.

3. Systems

Another effective strategy identified in the report to improve business profitability was the use of technology and systems.

Seventy-eight per cent of the benchmark businesses recorded improved profitability through efficiency gains using technology, with 72 per cent seeing an improvement in profitability through process improvements.

In fact, of the benchmark firms surveyed in the report, 28 per cent were intending to introduce a new CRM system, 24 per cent a new client portal, 24 per cent were intending to roll out a managed accounts offering, 18 per cent were going to introduce new data aggregation and dashboard tools, and 14 per cent were implementing a new client mobile app. Only one-third (28 per cent) of firms said they were not going to introduce any new systems or platforms.

“For an advice business to remain profitable and relevant to clients in the years ahead, it needs to understand the key drivers that underpin successful businesses: clients, staff and technology. By better understanding the demands and requirements of each, an advice firm can better position itself for future growth,” Mercer said.

The Macquarie 2018 AFS Benchmarking Report is based on the 2017/18 Macquarie Accounting and Financial Services Benchmarking survey, conducted in December 2017, and the 2017 Macquarie Propensity Project surveys conducted throughout 2017.