Matthew Fogarty has spent the past few months traveling around the country and listening to the challenges that advice practices are having with the impending reforms. Here’s what he found.
In the past 12 months the practice management agenda for most industry stakeholders has been dominated by getting compliant with the new Future of Financial Advice (FoFA) regulations and, in particular, the requirements for delivering fee disclosure statements.
However, as the practicalities and mechanics start to really seep in with the July-1 countdown rapidly approaching, the focus for many advisory practices is quickly turning to how to shape their business models in order to continue to grow and prosper in a post-FoFA environment.
Sharpening focus
While it is generally accepted that the latent demand for quality financial advice and the looming baby boomer retirement bubble provides immense opportunities for advice firms, there are still many growth challenges for practices. As we travel around the country helping them prepare for the future in our consulting work, these challenges are coming into significantly sharper focus. Some of the main ones are:
• What is the revenue impact on my firm and future asset value of the business if clients don’t actually want an ongoing relationship with it and instead want a pay-as-you-go, transaction-based advice offering?
• How can I free up my staff’s time so they can actually deliver proactive client services and do so consistently – do we need to start outsourcing some of our back-office administration work?
• If client engagement and communication is so important, how can I provide my advice offering to clients in the way they want while doing so within the business rules and technology framework of the licensee?
• Is the future value of my practice going to be based on clients with the most funds under management paying the highest fees or do we need to seek to diversify revenue streams?
What’s new?
Much of the practice management theory behind these questions is not new. It has been part of the conversation we have been having with firms over the last 10 years. The difference now is that practices can no longer afford to pay lip service to the theory. They will have to actually implement it in order to get a ticket to the game in a post-FoFA world, and how well they do this will increasingly distinguish the quality and value of firms.
We believe it is going to be a matter of getting back to some basics for most firms: redefining business plans, more sophisticated marketing execution, refining and implementing their value propositions, reviewing client segmentation models, sharpening the scope and pricing of advice and ongoing service offers, embedding back-office work flows and processes, and making sure the right people are in the right roles – all of which will need a much stronger focus on implementation of good practice management principles rather than just the theory.
Matthew Fogarty is national practice development manager at The Encore Group