John de Zwart is on a mission – a mission to improve the professionalism and profitability of financial planning, and to restore to the business much of the satisfaction and fun that it used to provide to practitioners.
Since mid-April 2013, de Zwart has been redefining the strategy for Professional Investment Services (PIS) and Associated Advisory Practices (AAP), the two financial planning businesses within the Centrepoint Alliance group.
The roll-out of a new Xplan solution began in December and is expected to be completed by mid-February. De Zwart describes it as the smoothest software roll-out he’s ever seen, and its success will underpin the strategic and cultural changes he wants to bring to the group.
The strategy also involves a number of key appointments, which will be announced in coming weeks. And the AAP professional services team has been rebranded as Centrepoint, to reflect a consistency of approach between its own advisory practices, operating under the PIS Australian financial services licence, and independent AFSL-holders via AAP.
Tangible benefit
A major tangible benefit of de Zwart’s strategic overhaul of the group will be to reduce the compliance and administrative burden on advisers by, on average, between a third and a half.
“That’s in one year,” he says. “It’s not difficult.”
De Zwart says it’s then up to each individual practice how that time is used. It might be to reduce the principals’ working hours; it might be to cut back on the number of back-office and support staff; or it might be to spend more time with new and existing clients.
“Their choice,” de Zwart says. “I’m not going to push product on them. What I want to do is come back to what the customer is after.”
De Zwart argues that “what people went into the industry for isn’t there any more” for a lot of financial planners. He says a focus on compliance and administration has distracted and hence detracted from the more satisfying and valuable parts of the job.
“People thought we were going to get through FoFA on July 1 last year; I think FoFA just began at that point in time. People had spent two or three years preparing for that, but what people went into the industry for is not there today.
“They’re very customer-centric individuals, generally. They enjoy the relationship side of their business. You do find some who are very technical focused, but the majority of them are more people-orientated and a lot of them have migrated from other industries – like insurance salespeople, mortgage brokers, bank managers – into that space; or they are accountants who are more people-friendly than the traditional accountant and have moved into that space.”
De Zwart says a people who do not have appropriate qualifications “and are not part of an industry body, or anything like that, shouldn’t be part of the industry in five to 10 years’ time”.
“But if they do want to play, that have to go through that compliance to make sure the advice they are giving is the best interests of the customer,” he says.
“I think being part of a profession is that you do have professional standards. As a professional, you’re not thinking about yourself, you’re thinking about the individual and also the profession and the brand of the industry. I think that’s a big part of where the industry is lacking at the moment. There’s a lot of noise and voices out there at the moment, but not a lot of coalescing and forces taking shape to move it in that direction.”
FoFA helped move the industry the right way in that regard, De Zwart says, but a focus on compliance has led to often massive inefficiency.
“If you look at a practice now, you might find that with two advisers in there there’s five support staff and they’re probably only seeing five customers a week,” he says.
“I’d say that’s 90 per cent inefficiency, in terms of customer value. And all the administration that goes on behind that, all the compliance work, all the research work that has to be done to maintain a compliant practice all of a sudden has turned what was meant to be a very dealing-across-the-table, face-to-face, helping-people-with-their-financial-needs [business] into covering [themselves].
“It’s as much about a cultural shift. What are the customers after, and how do we design solutions that look after those needs, and then how do you align this with the advisers’ needs?
Make it fun, make it profitable
“I look at them and a lot of them are struggling in that environment. It’s not a fun environment. It’s bureaucratic; the documentation is huge; I don’t think the customer is getting anything from the fee disclosure statement and the massive statement of advice – but there is some stuff in there that’s really, really critical: understanding your customer; understanding your solutions that are being provided; and meeting their needs.
“But I think a lot of that can be done in a much simpler way. How do you bring that enjoyment back into what you are doing, and service the end-customer needs? That’s what we’re trying to do. How do we make this a profession, how do we make this fun, how do we make this profitable for the adviser?”
