The 2014 Shanghai Professional Investment Services Conference kicked off on Monday, as more than 180 PIS planners, accountants and support staff gathered in Shanghai, a city with a population roughly equal to the whole of Australia.
PIS’s 18th annual conference spans five days and is focused on helping advisers improve business performance and deliver high-quality advice. Delegates will receive insights and intelligence from a range of world-class consultants, speakers and thought leaders. And Professional Planner will be there, too. All this week, editor Simon Hoyle will be sending back regular blogs and articles about events at and around the conference. Check back here throughout the week for the latest updates on what PIS planners are hearing and learning, and to follow one of the world’s most inexperienced international travellers as he negotiates the details of a week away in China.
Wednesday, April 16
Free afternoon and evening yesterday. Visit to the markets with Mr & Mrs Stackpool; an entertaining taxi ride home (after finally convincing a driver to accept the fare). An evening spent writing on the riveting subject of the Tax Agents Service Act for the next edition of Professional Planner; a week away doesn’t stop the magazine coming out. Outside of the fines for regulation conference-related japery, reports of atrocities are yet to emerge from last night’s varied activities – but the day is young.
“It’s raining outside but the sun is shining in here,” says Neil Rogan, as he gees up the audience in preparation for a presentation by Tim Reid, billed as “marketing futurist”.
Today’s opening fact is that there are 110 cities in China that have a population larger than Sydney’s. Meanwhile, back at home. the NSW Premier has resigned for lying about receiving a $3000 bottle of wine (and Tony Abbott is testily defending another high-profile Liberal caught up in the NSW Independent Commission Against Corruption inquiry). Yesterday it was reported AC/DC are on the verge of breaking up. You go away for a few days and the joint falls apart.
The opposite of Harvey Norman
Tim Reid says there’s never been a better time to market a financial planning business – but there are ways and ways of marketing.
Archetypal “push marketing” is embodied by those frenetic Harvey Norman TV ads, and this type of marketing should be avoided, Reid says.
“So much marketing we see out there is push, push, push,” Reid says.
“Marketing [should be] all about ‘What’s in it for me?’, what’s in it for the consumer,” Reid says.
He says books, videos, podcasts, and internet forums can be harnessed relatively simply, and can be very effective in delivering “quality, helpful knowledge that makes your clients and your prospects more informed”.
Anything that positions you as both helpful, an expert and accessible will help and prospective clients feel like they know you before they’ve even met you – and makes converting prospects into clients much more efficient.
For the purposes of a smooth transition to the next bit of this update, it should be pointed out that a case study used by Reid involved a bloke called Darren – who everyone calls Dazza.
From Dazza to TASA
Moving on from the snap, crackle and pop of marketing and marketing strategies, we’re into a legislation and regulation update. Rhett Das, professional standards manager for PIS, has called for a delay to the start date for financial planners to comply with the Tax Agents Services Act 2009 (TASA).
From July 1 this year, financial planners who provide tax (financial) advice – which last week was clarified and defined further by the Tax Practitioners Board (TPB) – will need to notify the TPB that they wish to be registered.
But in the absence of solid guidance on how TASA will apply to financial planners, and with scant detail available on the continuing professional education (CPE) requirements, Das has suggested a delay to the start date.
Financial planer who provide a tax (financial) advice service for a fee after July 1 and who are not registered can do so provided they work under a particular disclaimer (Das says PIS has built this disclaimer into its Statement of Advice [SoA] templates).
But he says a dealer group cannot in good faith suggest a financial planner notify and register with the TPB in the absence of better information about how it will all work.
Decision time
Attend Dr Adam Fraser’s “The Third Space” session at 2.30 this afternoon, or head for room 201 and take on the five- and six-year olds in the PIS Easter Egg Hunt?
The Third Space it is, then
Fraser starts off with a doozy. He says Bill Gates once reckoned that the invention of the PC meant we would all enjoy a 30 per cent increase in leisure time.
(Professional Planner reckons that what Gates couldn’t foresee was that most of that time would be consumed installing and reinstalling Microsoft software and spending time on hold on the Microsoft help line).
Rather than having more downtime, the world is actually getting faster. Fraser calls it “compression”. It creates stress and strain and struggle; how individuals respond to those things – how resilient they are – is the critical determinant in their wellbeing and happiness.
“We’re discovering that our attitude towards stress and struggle and strain is more important than ever,” Fraser says.
So why do some people choke under pressure? It’s because their focus shifts to outcome, not execution, Fraser says, and they take the bad stuff that’s just happened into what happens next. His solution is something called The Third Space, and the thinking behind it came from three specific conversations: with an Olympic gold-medal volleyball player; an analyst of male tennis players; and a chief executive officer. In each case they spoke about an ability to leave behind the negative things that had just happened, to recover, and to take a positive mindset into what happened next.
Fraser says The Third Space is where people who cope best with stress and strain and struggle can reflect, rest and reset: reflect on what’s gone well; rest to recharge and recover; and reset by choosing the behaviour they want to adopt from that moment on.
To start with, it’s a conscious effort, until it becomes second nature. But people who can do it effectively tend to become more resilient.
“Just ask yourself this question whenever you move form one space to another: How will I show up in that space?”, Fraser says. He says there are two types of person in the world: Those who light up a room when they walk in, and those who light up a room when they walk out. We can choose who we want to be.
And with that…
Centrepoint Alliance chief executive John “Jay-dZ” De Zwart (not Professional Planner’s idea as a nickname, we hasten to add) thanks Melissa Lamb and the conference organising team; the conference partners; delegates; and the PIS management team.
De Zwart, who chalked up 12 months at Centrepoint only yesterday, is steadily mapping out a strategy that honours the best parts of PIS’s legacy, and which seeks to establish it as the dealer group of choice for the independent adviser.
And with that, De Zwart brings the conference officially to a close.
There will be a group photo, and then a couple of hours to get ready for the conference gala dinner.
Tuesday, April 15
The conference partners’ dinner last night at the Sky Ballroom of the Shanghai Grand Theatre, in the People’s Square of China, was treated to some entertainment, introduced as what sounded like traditional Chinese line dancing. Shanghai, it seems, is not only quite highly westernised, but highly country-and-westernised. In fact it was traditional lion dancing – and as Neil Rogan, Centrepoint Alliance’s head of distribution strategy and marketing, found to his expense this morning (he has been duly fined, as part of the conference’s support of the youth cancer charity Canteen), there’s a difference between a lion and a dragon.
Some more stuff *
At one point in the early 2000s, 25 per cent of the world’s available cranes were at work in Shanghai. There are 10 buildings in New York that are classified as “skyscrapers” and it took about 100 years for NY to reach that number. In China there are 110 buildings classified as “skyscrapers”, and most have been built in the past 10 years.
The collective noun for pandas is a “sleuth”.
Have a think about this
The Business Leaders Panel is under way. Two questions all financial planners should ask themselves, courtesy of facilitator Keith Abraham:
1. In your business, what do you need to start doing?
2. In your business, what do you need to stop doing?
“You need to think about what you need to do more of and, more importantly, what you need to do less of,” Abraham says.
Here are some questions from Troy Theobold, PIS Financial Adviser of the Year and director of financial services at Robina Financial solutions:
1. How large do you want your business to be?
2. How do you find clients, or how do they find you?
3. What type of client are you looking for?
4. How many clients do you need to reach your goal?
5. Where are you going to find your clients?
6. Who will work with you along the way?
7. Why should they work with you?
The role of the financial planner is “about making sure clients are getting their outcomes; it’s not about products,” Theobold says. “You need to focus on advice, not stocks.”
Marshall Brentnall (pictured), founder of PIS Practice of the Year Evalesco Financial Services, is up next. Brentnall posted a blog on his website last month, which he references now.
“Why the noise [around FoFA] may not have the impact on everyone in this room…and whilst it may not have the impact on your clients…I think there’s an element of the noise that is having an impact on the 70 to 80 per cent of the population that does not have a relationship with a financial adviser,” Brentnall says.
“So to take it a step further, what makes us special? Our role is to provide financial leadership to our clients. We’re there to cut through the noise, the noise that is sometimes the mainstream media. It’s been a tough couple of years, and we’ve been though a fair amount.”
Next up is Kylie Wright, AFA Adviser of the Year finalist and partner in Ulton Chartered Accountants. Wright sys that in the next 25 years, about $1.45 trillion of wealth will transfer between generations as the baby boomers die. there are massive opportunities for financial planning firms to offer estate planning services, she says.
“Once you get a full understanding of estate planning, it leads into other areas,” Wright says – including insurance, succession planning, self-managed super and restructuring for asset protection. But the key to creating a compelling estate planning proposition (or any proposition) is simply to get started.
Jenny Brown, AFA Adviser of the Year winner and director and head of strategy for JBS Financial Strategies, says a successful advice practice has to have multiple touch points with clients, and a clear, consistent brand. What does he business stand for? And what will it deliver to clients.
Brown says the firm has gone so far as trademarking the words “create, protect, enjoy”. And every point of contact with clients has a call to action, reinforcing the firm’s brand and values.
Trust me
Tax nerd, tax trainer, tax writer and tax blogger Ken Mansell says that the traditional structure for professional services firms will not be appropriate in future. The Tax Commissioner has seen to that.
“Each individual element – almost every single element of that structure – has had the Commissioner go, ‘Ooooh – I am not sure about that’,” Mansell says.
In November last year the ATO issued a Taxpayer Alert, which Mansell says is, effectively, the Commissioner saying, “I think something smells; I haven’t figured out what is making the smell”.
Mansell says the Commissioner is saying he has concerns that people move from a partnership of individuals or from just being individuals to a partnership of discretionary trusts, and they only do it for the tax benefit.
Mansell says it’s yet not a ruling, but a ruling is expected later in the year. And it’s not retrospective, but will apply from November 22 last year.
“When you move to a partnership of discretionary trusts, unless you can argue why you did it, and argue it wasn’t for the tax benefit, he’s not going to let you move,” Mansell says.
The Commissioner, Chris Jordan, has a background as a tax adviser – so “unfortunately, he knows what he’s talking about, because he’s given the same advice as we have”, Mansell says.
There is a solution to all this, but it makes yesterday’s analysis of China’s economy look simple. See Mansell for more details.
Jim Stackpool wants to know: Are you ready for this?
Financial planners faces a once-in-a-lifetime opportunity genuinely to be paid for the value they provide, says Strategic Consulting and Training founder and managing director Jim Stackpool, but too many financial planning practices are not ready to make the changes they need to make to exploit the opportunity.
“Are you ready to halve your number of clients and to double your fee?” Stackpool says.
“Are you ready to start charging for the value you really deliver? Are you ready to start charging for just being there – not doing anything, just being there?
“Be prepared to start ugly. Don’t wait to be comfortable.
“But let’s not let a lack of readiness hold us back.”
Most of the stuff financial planners tend to do reflexively – like having conversations about retirement or SMSFs or insurance – are all givens.
“It’s like going to the phone company and them saying to you: ‘It makes phone calls’,” Stackpool says. The trick is to learn how to have “deep, rich and meaningful” conversations with clients.
He says it’s about building trust, and then rapport. And that’s why they’ll happily part with a healthy fee – not just this year, but every year. A fee that represents value to the client, and a healthy profit to the practice.
Stackpool is taking conference delegates through a roleplaying workshop on how to have those conversations with clients, and how to build them into a practice’s advice processes and systems.
Looks like there will be a few ugly starts back at work next week on Tuesday morning.
* None of this has been properly fact-checked, but it nevertheless sounds impressive.
Monday, April 14
China is a country of mind-boggling numbers. Andrew Hogg, general manager of Qantas in Shanghai, told the welcome dinner for the conference last night that there are 100 cities in here with populations larger than Sydney’s; and every year there are five airports constructed with a capacity greater than any in Australia. Shanghai will be a fascinating place to see…once the “cloud” lifts.
Seven things we learned from “The Business Growth Expert” Steven S Little right off the bat:
1. “Shanghai” translates into English roughly as “town above the ocean”.
From a given list of countries:
2. The highest murder rates are in Honduras, Jamaica and Belize.
3. The lowest murder rates are in Hungary, China and Australia.
4. Since 2004, only three artists have achieved album sales in Australia of more than 700,000: Adele; Pink (twice); and Susan Boyle. No Coldplay, no Gotye, no “violin guy” (thanks, Jim Stackpool, for that one).
5. In 1939, freshmen at Princeton University voted Adolph Hitler as “The Greatest Living Human”. (They voted Albert Einstein second.)
6. There is a greater than 99 per cent probability that in a group of 70 people two of them share a birthday.
7. There are six letters “F” in the sentence “finished files are the result of years of study combined with the experience of years. (The majority of the people in the room miscounted.)
The greatest number of correct answers was six.
“Challenging your most closely held beliefs is the key to driving sustainable, desirable profit growth,” Little says.
High performance practice profiling
Anne Fitzgerald – GM of strategic initiatives for CentrePoint Alliance – and Rebecca Sheils – director of Beddoes Institute – have just given a great behind-the-scenes account of the work being done to improve systems and processes supporting PIS practices, including the completion of a landmark benchmarking study. Full report on Professional Planner website tomorrow morning. (OK, well, I see that the report is there already.)
Careful of the tea
Meantime, there’s been discussion about the merits of Shanghai as a conference venue. Seems a popular spot, with another dealer group apparently here recently and a third due here in the weeks to come. There’s a story circulating about a number of ARs of another dealer group getting into a spot of bother involving some kind of attempted extortion bid during a conference excursion. And there was a warning delivered this morning about the potential perils of accepting the tea routinely proffered for consumption outside the hotel. There should be a head count of delegates both before and after tomorrow’s scheduled visit to the local markets.
The real picture?
How better to wrap up Day One of a pretty intense conference than with the “hardcore” version of Jonathan Anderson’s economic presentation on China? None better, you say? Then you’d have loved how Day One wrapped up.
The president of Emerging Advisors Group says the near-term outlook for China is not all that bad, but it’s pretty bad; but over the longer term it’s pretty bad, but not all that bad. China’s got some major problems, but most of them are not China’s own – they’re more due to general global weakness. Which may or may not be due to weakness in China. At least, that’s what he might have been saying.
There’s a massive credit bubble occurring right now, which has to be fixed, Anderson says, but China’s is not an economy that’s about to crash.
“Getting back to monetary financial stability isn’t going to be pretty, and markets need to be prepared for stress and fear over the coming 12 to 18 months,” he says. But even if China maintains a “business-as-usual” course, it’s still going to produce 7-per-cent-plus growth.
Complex? You bet. And tomorrow we’ll be out in amongst it.
Simon Hoyle travelled to Shanghai to attend the Professional Investment Services annual conference as a guest of PIS.
