As his financial planning business celebrates its first year, the founding principal of Canopy Private Wealth credits an unlikely tool for much of his success.
Sourcing clients is perhaps the most commonly cited challenge for new planning businesses. Chris Bates, founder and principal of Canopy Private Wealth has attracted many of his clients through content marketing.
For the last six months, he has been posting regular blogs on business networking site LinkedIn. From the 20 posts written since January, Bates estimates he has garnered around 12 meetings and eight full service clients.
“It also helps with your business planning, in helping you sift through your thoughts, helping you clarify your views on things and the direction you want to take your business in,” Bates says.
He has written on a broad range of topics, from the controversial commissions versus fees debate, to SMSFs, property buyers’ advocates and bank fees. These haven’t always been popular with the entire planning community, but almost always stir debate. Some of the most controversial posts so far include, “Why I despise the banking model,” “Let’s face it…everyone hates us,” and “Life insurance. Why I hate commissions.”
Many of them are also focused on specific aspects of retail investing and superannuation. These are particularly useful in appealing to prospective clients, and for educating those with an existing Canopy Private relationship.
From a client perspective, Bates says it saves time, because much of the thinking around and explaining of key concepts about his services has already been done. “So I’m not going to sit here and spend 15 minutes explaining interest-only loans, if I can send you a 10 minute read and then you’ll really understand it. I send articles to clients now.”
The licensing dilemma
As a start-up sole trader planning business, Bates says the greatest challenge has been balancing his time between meeting with potential clients and working on the business establishing pricing and procedures.
“It’s been a challenging year, because as a sole trader, you get pulled in a thousand different directions…and I’ve had to stick to what my values are around transparency and conflict-free advice.”
Deciding whether to become self-licensed or to partner with an existing AFS licensee was one of the first decisions he needed to make. Once he opted for the latter option, Bates then spent a number of weeks assessing different options.
“It was a great decision to go with Madison,” he says. Without mentioning the names of those considered during the selection process, he says some have found themselves in breach of ASIC and involved in advice scandals, vindicating his ultimate selection of the non-aligned Sydney-based group.
Being entirely fee-for-service across all advice, including life insurance, underpins the Canopy Private business model.
The remuneration model
While the debate has raged in recent months around commissions versus fees, Bates says simply: “If your value to the client outweighs your fee, the client will pay the fee.”
Many advisers argue that if a fee-for-service approach becomes entrenched across risk advice, many lower-income clients won’t week advice because of the cost. They also argue advisers won’t take them on because of a lack of profitability.
Bates also has an uncomplicated response to this: “Get another client.”
“There’s no point taking money off C and D clients just so I can make money…because if it’s not right for the client, it’s not right for the client.
“A lot [of clients] don’t need a full ongoing relationship…insurance-wise, once it’s set up, the super is sorted, maybe they don’t need you for an ongoing relationship. There’s a way to do it to be fair and equitable for the client. You’ve got to add value,” Bates says.
He acknowledges that after an initial meeting, in some cases, clients don’t need an adviser at that time. In these instances, he often sends a detailed email telling them what to do, such as getting a cheaper super fund, saving more or paying off a debt.
“Beyond that, there’s nothing I can do for them. But I’ve helped them, and I’ve established that contact,” Bates says.
“Not every client is going to need a full advice-based solution…and there are businesses out there that are providing low-cost advice for low-complexity clients…that stuff will be done virtually online at a low-cost.”
Looking ahead, Bates has a number of things planned for the next year, including adding small-to-medium business consulting to his existing combination of full-service planning and mortgage broking. He will also be taking on his first staff member.
