Independent Financial Advisers (IFAs) must broaden their skill set, become more engaged with clients and concern themselves with advice rather than fees if they are to stand out from the crowd.
This was some of the advice imparted by boutique-dealer-group heads and Australian Financial Services Licensees (AFSLs) at a Wealthtrac presentation held yesterday (July 12).
Matthew Johnson, managing director and chief executive of investment-platform provider Wealthtrac, asked three licensees to reflect on IFA performance, managing the needs of clients and anticipated changes over the coming 12 months.
“We see so much media focus on the larger dealer groups but, in a period when everyone is treading water, success in current markets will be as a result of smart portfolio management, rather than reliance on new products,” he says.
However, Chris Appleyard, dealer principal at Custom Wealth Solutions, believes a sideways market should not be a barrier to meeting ambitious growth targets.
The licensee recruited 35 advisers in 12 months, growth that drew the attention of ASIC, and yet he claims to have rejected more than were taken on.
“This could not be a more challenging and frustrating time to be an adviser,” he concedes, while giving the impression there is nothing he would rather be doing.
“IFAs need to bring more to clients, become more engaging. The days of sitting back are over and you now need to add value and show how you are adding value.”
According to Appleyard, Custom Wealth Solutions brings planning practices “compliance by default”, but not all applicants make the cut.
“Within five minutes of meeting an adviser, I decide whether I would refer my mother to them,” he says.
Jason Cutrupi, owner of boutique JC Consulting, says advisers need to take a “back-to-basics” approach to investment management
What the survey reveals
A recent Wealthtrac survey found that almost 85 per cent of advisors had made changes to their clients’ asset allocation in the past year.
And, while they were actively managing the portfolios, 80 per cent believed they had sufficient access to products to adequately meet their clients’ needs.
The survey found the major focus of the changes had been for capital preservation (48 per cent), an even split between income and growth focus (24 per cent) and just 5 per cent moving clients into cash.
Additionally, while capital preservation is key, most advisors are encouraging their clients to have some risk exposure.
Around 70 per cent said they are prepared to accept some level of risk to generate strong returns. Less than 30 per cent said they are only willing to take on a very small amount of risk.
SuperWise Financial director Mark Hawes said the Future of Financial Advice (FoFA) reforms remain the game changer and voiced his concerns over industry undercutting.
