Phone-based advice achieves greater engagement

Phone-based financial advice will “deliver a better engagement with clients in those practices” that employ it, and solve the industry’s need for efficiency and innovation, according to Paul Barrett, general manager of advice and distribution at ANZ.

“We’re building a phone-based advice presence,” he says.

“Essentially we can call up clients, we can talk to them about what is going on in the world, in terms of their investment portfolio, or rules and regulations for superannuation when things change.”

Barrett says that while his intentions for advice and distribution at ANZ focus on strengthening adviser knowledge, efficiency and innovation, the phone-based model is a wholly adviser-led initiative.

“It’s interesting to note that this has been one of the things our aligned financial planning groups have been asking for,” he says.

“The advisers in those groups have been saying to us, ‘How can you help us as a licensee to… service our client base in an efficient way in a FoFA world?’

“That’s not to say we’re directly servicing those clients; we’re doing it on behalf of the authorised representatives of our licensees.”

The authorised representative acts as a “quasi-employee” and must first be approved by the licensee they will work with, then spend time in the practice understanding its service offering, operations and culture.

“So it may be their B- or C-class clients they’re calling,” Barrett says.

“The call then actually offers real-time financial planning advice and service so these people can fulfill a limited advice need or a scaled advice need – on the spot.

“If there’s a more holistic need that’s uncovered in the conversation, then it gets referred back to the planning firm. They are calling on behalf of that firm, not on behalf of ANZ Wealth or on behalf of OnePath.”

In an opt-in world, this is the type of service that financial planners under licensees will be asking for, Barrett says.

“The average planner has more clients in their book than they can actually service and sit down [with] face-to-face,” he says.

“Innovative, efficient approaches to the provision of advice are going to be in demand.”

ANZ currently has 25 people providing financial advice over the telephone and Barrett expects the phone-based advice model to get a lot bigger.

“I’m not going to put a [target] on it but I would say that if everything goes according to our plan, I would see a significant increase in the number of financial advisers providing advice over the phone in our organisation,” he says.

“We’re assessing it week to week…and as demand grows, we’ll grow it.”

According to Barrett, the key challenge faced by the advice industry is not FoFA but the “advice value dilemma”.

  “Research in the past suggests the consumer will pay around $300 on average for advice and that the cost to provide fully holistic advice ranges between $1400 to $3500 depending on the complexity,” he says. “How do you close the gap and solve the advice value dilemma? “The ultimate answer is that we need to improve the value of advice and the perception of advice amongst consumers but we all know that is a long-term journey and we’re all doing things to achieve that to get there eventually. “But efficiency is going to be critical, so practices and licensees will need to employ tactics to enable them to become more efficient and that includes embracing with open arms the scalable advice opportunity that has been presented through the FoFA reforms. “Consumers don’t all need a one-size-fits-all advice approach," Barrett says. "There are plenty of consumers that have not engaged with planners because of that approach and there are plenty of consumers out there that would engage in a more simple approach or even a phone-based or potentially web-based advice approach. “Part of our plans are to ensure our advisers have the tools to enable consumers who do not want holistic advice to access other forms of advice that is more efficient to deliver, more efficient in time, consumption, in terms of the cost to deliver.” In light of the recent FoFA draft legislation release, Barrett’s reaction remains the same towards opt in, calling the measure “overkill”. “I see and acknowledge that there is a grandfathering, which is a sensible move, which enables existing clients to remain in the non-opt-in deal…and alleviates some of the practical issues of implementing opt in,” he says. “We’ve got a best interest duty, we’ve got the banning of conflicted remuneration, banning of commissions, soft dollar rules coming in and a raft of other requirements, [so] opt in appears to be an overkill to me. “However, if we can use things like SMS, if we can use telephone-based opt in, if we can get creative about how we do the opt in, maybe we can drive the cost down, so that’s a good opportunity for us, but it remains to be seen how we’ll do all of that.” Barrett says he is also focused on growing their bank-based financial planning business through an “organic internal strategy”. ANZ Financial Planning will offer career pathways to ANZ retail bank employees. Barrett says he has set a realistic target of attracting 50 full-time financial planners internally per year, over the next few years.