On September 24 and 25, Professional Planner is attending and reporting from the 2015 PHAROS annual conference in Canberra. PHAROS is the holding company for a number of financial services businesses, including the Madison Financial Group financial planning dealer group.
(Day One coverage can be found at the end of the Day Two coverage)
DAY TWO
When the agenda said the venue for Day Two of the PHAROS annual conference was the Shine Dome, Professional Planner had a momentary image of Tom Hardy and Charlize Theron running sessions on marketing and best practice. Alas (or perhaps fortunately) the reality is a bit less Mad Max; the Shine Dome is Australian Academy of Science building. REALLY comfortable seats – Madison GM Giulio Russo has taken up position in the high-up seats and he’s spotting sleepers in the room after last night’s conference dinner at Old Parliament House – but we all have a great view of the entertainment provided by conference sponsors struggling to erect their banners down the front.
Off we go…
The evolution of marketing
Carolyn Miller is probably best known to most people from being on Gruen Planet (try saying “Gruen Planet panellist” three times quickly after a conference dinner). She’s here now describing the evolution of advertising and marketing since the 1700s.
Miller says that for all the developments that have taken place since then, word of mouth is the original and still the best form of marketing, recommendations of peers and friends are still trusted more than advertising. Someone else’s experience of a product or a service counts for a lot.
Over time, the words used in advertising have lost some of their power. An example of this is the word “innovation” – “it doesn’t belong on a packet of chips,” Miller says. Has advertising gone too far in its language?
Ads used to be practical, she says –“very good ground coffee” is an example of an old attention-grabbing advertisement headline – but over time evolved to be more and more attention-grabbing, and developed a peculiar type of hyperbole and all sorts of fantastical, unsubstantiated claims for what a product could do.
But ultimately, authenticity is what counts as consumers become increasingly savvy. Advertisers focus on what consumers need, not just what a company wants to tell them.
And it’s moved into the digital world, of course. There, messaging needs to be interesting, Miller says. People do not watch ads, they watch stuff that interests them and if you’re lucky it might be your ad.
Here’s Miller’s brief history of the evolution of advertising:
1922: first ever radio spot; it runs for 10 minutes.
1950s: TV becomes an advertising force
1970s-80s: Golden age of “disruption advertising” and campaign advertising across TV, radio and print.
1990s: The internet changes advertising again – remembering that in 1993 the internet had just five million users.
2000: the digital age takes hold – and mobile devices become a medium
Today: Content is king, and audiences need to come to you.
Miller says one thing that hasn’t changed over the ages is the concept of a brand. A brand is an emotional feeling you have about a product or a service. It’s “the emotive connection between human beings and the company offer,” Miller says. A brand helps a purchase “feel right” to a consumer. People want to be associated with certain brands. And brand choices are not rational.
Trust is paramount in building a brand, and when it comes to trusting someone with their money and their future, people need to really, really trust you. And the way to win trust is to not over-promise in the first instance, and to deliver what you say you’ll deliver.
The rise of social media means marketing and advertising and creating a brand is now within the reach of all businesses.
Miller says one thing everyone in the room should do is get their LinkedIn profile sorted out.
Miller provides some Facebook stats:
• It has 14 million users (up 200,000 in 2015)
• It accounts for 17 per cent of all mobile usage
• The average time spent on Facebook every month is 7h 43m
• 4.4million ove 45s are on Facebook
• 22 per cent of teens say Facebook is their top social site, down 10 per cent from 2013; 30 per cent say Instagram is.
Here’s some stuff on You Tube
• Video consumption jumped from 63 million hour per month the almost 120 million hours a month in the space of just one year.
• You can make money out of You Tube if you get a lot of hits, but not much: $3300 for one million views.
Miller gives tips on how to make social media content work:
• It’s about making things interesting enough that other people want to comment on it.
• Don’t post for the sake of posting – be discerning.
• Asking the audience questions is the best way to create engagement.
• You need to define your objectives clearly.
• When you know what you’re doing it for, then you can make it work.
• Talk in headlines and sound bites – people have short attention spans and want to be entertained.
Miller suggests there are seven steps to social media success
1. Be an aggregator – share content
2. Connect on multiple platforms
3. Remember you can’t control everything and that people can comment and be nasty.
4. Use technology to share, don’t create it all yourself
5. Help facilitate user experience stories
6. The digital world is written in ink – it’s permanent
7. Observe your audience and gather insights
Benchmarks and better businesses
Madison GM Giulio Russo is running through a benchmarking report produced with the input of almost 50 Madison financial planning practices. Russo says Madison will work with Rod Bertino and Terry Bell at Business Health to analyse the data and deliver it back to practices in a form that makes it relatively straightforward to implement.
Madison is also set to launch a new website its advisers can use to access information from the benchmarking report and also from evens such as the annual conference.
Michelle Flanagan, the general manager of Genesis Financial Partners describes a program her business has been on to make its work flow and processes simpler and more efficient. She says documentation of processes means staff movements don’t diminish the firm’s IP; but highly systemised processes can throw up challenges around how to develop people and have them think creatively and innovatively.
Ultimately, though, Flanagan says the changes have improved the firm’s access to information, and information is a powerful thing for making better and more informed decisions. It also enables the business to spot when processes have not been adhered to, and to identify and head off potential problems before they get out of hand.
Chris Bates, principal of Canopy Private and a self-confessed tech-geek, says he’s using LinkedIn most to access his target markets and to develop a personal brand. Unless you’re building personal brand, you’re not building a business, Bates says. You have to separate yourself from the herd.
Bates makes extensive use of apps to improve efficiency as well – for things like booking meetings and managing emails (called SaneBox).
Bates says that as apps improve and internet speeds pick up (as the NBN rolls out), advice will move further into the virtual world and planners won’t always need clients to come into the office.
One great idea
Sarah Garnett’s one great idea was to give books to homeless people in Sydney. The idea came about after a chance encounter with Joe at a soup van that Garnett was volunteering on. Joe was reading a book, which Garnett says was a strikingly unusual thing to see.
Garnett says the death of a close family friend made her rethink her own life, and she had an epiphany: she would do something meaningful, and she’d do it now. She started taking books to Joe. Before too long, she was taking boxes of books with her and giving them away to any homeless people who wanted them. The Footpath Library was born.
When the Footpath Library started, you couldn’t borrow a book from an “ordinary” library if you didn’t have an address. That’s changed now, but it hasn’t affected the popularity of Garnett’s service.
Garnett says the simple act of giving a book to a homeless person does wonders for their self-esteem. She says it can reignite a previous interest, or provide an opportunity to escape from their current lives. And above all, it encourages literacy.
The Footpath Library now has 130 volunteers and three part-time staff, and it gives away 3000 books a month and has branches in Sydney, Melbourne, Perth and Brisbane. (Its patron is the journalist and author Peter Fitzsimons.)
Garnett says she used to thing homeless people were “different from you and I”. They’re not – it’s only circumstance that set them apart.
The use of books for therapy is called “bibliotherapy”. Garnett says research shows that books can enrich life quality and life spirit.
In the UK, a program called books on prescription gives away books to mentally ill patients. Garnett says patients make far fewer visits to doctors, and significantly fewer prescriptions are written. And patients report being happier.
Garnett says the Footpath Library is about to launch a literacy program for homeless people, which she hopes will have similar results on its participants health and wellbeing.
Garnett says her role at the Footpath Library is easily the most rewarding and fulfilling thing she’s been involved in. In addition into having a full life, now she also has a full heart.
Top tangible take-outs
Time to wrap-up the Knowledge Collective sessions from yesterday.
First up, practical risk tips. Giulio Russo says there’s no rocket science about the changing risk landscape; it’s about evolving to work with new commission structures. Product providers will have a say in how all of that turns out. Advisers will still have a good choice and a range of insurance providers, but may need to do a bit of work to determine which ones offer the best options.
Blackwing Profit Consulting principal Steve Salvia’s voice hasn’t improved since yesterday, when he ran four Knowledge Collective sessions back-to-back. The themes of those sessions were attract, convert, deliver, and scale.
He says a lot of the time practices are sitting on a gold mine that they fail to recognise: zombie clients. It’s often more efficient to try to reanimate or reawaken the zombies than to attract new clients. Salvia talks about leading the client, stretching the gap” – maximising the “distance” between where they are now and where they want to go, as a way that shows how valuable the financial planner’s services can be – and then getting hired.
Salvia also speaks about “to don’t” lists. It has things on it that are non-negotiable, and Salvia’s own list of don’ts includes: wearing a tie; doing admin (give it to someone else to do); handling emails again (give them to someone else to deal with); having a business partner again; going two months without a holiday; working with idiots and timewasters, for any price; doing anything that bores him or he’s not good at; changing his personality.
PHAROS Financial Group paraplanner Judy Baker says a key message from yesterday is that firms need to focus on what it costs to produce an statement of advice, and consider about outsourcing some functions to make it cheaper and more efficient.
A take-out from Hendrie Group practice manager Caren Hendrie’s session on doubling referral income fast is that businesses cannot afford not to be marketing constantly. She says cold traffic is the hardest and most expensive way to attract new clients; a better way is to use strategic alliance partners to achieve a “trust transfer” from them to you. But you need to demonstrate to them what’s in it for them: never make them look bad; make it win-win; make it easy for them; and have a system in place.
Looking to the future
Giulio Russo opened the show with his review of the year past, and now he’s about to take the wraps off PHAROS’s 2016 business plan. But first we hear from OneVue chief Connie Mckeage (OneVue underpins the Wealth Portal platform).
Mckeage explains recent changes at OneVue and some upcoming developments. She says that far from losing the ability to support advisers (as she says some competitors have suggested), the company is focused on “supporting you right”, but sometimes making marginal change isn’t enough.
She says the past 18 months have been difficult, but the existing operating model was broken and it needed to be fixed. Mckeage says OneVue made big changes and has reset. On Monday it launches a new mid- to back-office solution for advisers: Luminous.
Mckeage thanks the advisers who have stood by OneVue over the past 18 months.
Russo is on stage now. He says Madison will undergo some changes in the next 12 to 24 months. The changes will be in key areas identified in its benchmarking report: software planning support; knowledge sharing; practice management; business coaching; and the investment committee.
Russo says the company will be investing in people, in the areas of practice management, human resources and marketing. It will be investing more in software support and will cease to be software agnostic. Advisers coming into the group can’t bring their own templates and ways of doing things because of the compliance risk. It will be investing in paraplanning (potentially outsourced), and in developing investment solutions.
Russo says Madison no longer wants to attract the “DIY” adviser – they take too much time and effort and present too much risk. And they don’t commit to being part of the Madison preferred model. The company will spend more time determining exactly what sort of adviser it wants to attract: those that seek help, want to o use Madison’s resources, and want o be genuine business partners.
Madison wants to attract strategic planners, not those that are focused on investment solutions or portfolio management.
Madison will reduce it approved product list from the current 600 or so to about 100 products. About 300 of the 600 products are closed but have to stay on the APL, for a variety of reason. But the other 300 products are “a risk to us”, Russo says. Madison will focus on the top three or four best-of-breed products in each investment subcategory, to develop the best range of products it can to offer to clients. And it will clamp down on product manufacturers circumventing the APL and going direct to advisers.
The best thing you can do is give clients a choice of best of breed products and not expose them to 400, 500 or 600 products, Russo says.
He says Madison is looking at MDA solutions., and on creating dealer-level model portfolios.
Russo says staff recruitment is already underway. Adviser recruitment will start soon. He says Madison wants 20 new practices by this time next year – and he encourages existing practices to make referrals.
And with that…
It’s over. Earlier today advertising guru Carolyn Miller introduced the conference to a tonic called Mrs Winslow’s Soothing Syrup – a concoction with some seriously dubious (not to mention now illegal) ingredients, which claimed to be able to cure a truly staggering range of ills.
They don’t sell Mrs Winslow’s Soothing Syrup any more; but if they did then a couple of shots might be just the trick for the drive back to Sydney. It’s been a packed two days – a program full of outstanding content, and an insight into how a progressive financial services business works and supports its financial planners.
Thanks for reading (if you have been).
DAY ONE
It was a brisk 2.5 degrees this morning as a group of hardy souls braved a 6am walk around Lake Burley Griffin, but as the conference settles into the day 1 venue of the National Museum of Australia, it’s starting to warm up. Roughly 80 advisers here from Madison Financial Group, and 150 all-up including partners.
The two days will be MCd by Lisa Montgomery, former CEO of Resi Mortgage Corporation. Good line-up of speakers and sessions are scheduled, so away we go…
The year in review
Madison Financial Group general manager Giulio Russo reviews the year just passed for the Madison group: adviser numbers up by 20 per cent, or 17 in number. Six of the 17 are housed in new financial planning businesses. On the gender front, 35 per cent of the new advisers are female, but Russo says Madison, like the industry overall, has some way to go, with only 20 per cent of overall adviser numbers being female.
Revenue up and operating costs under control; Madison as a dealer group is profitable in its own right, Russo says, and 85 per cent of income comes from ongoing fees – a “strong annuity business” as Russo puts it. Fee for service, not transactional revenue is clearly the way to go, he says.
An issue facing the business is to rationalise its use of platforms, Russo says.
He nominates the ASIC report on the selling of life insurance and the resultant Trowbridge report as one of the biggest challenges the industry has faced. And he warns delegates that anyone who thinks reform of the sector is off the agenda with a change of Prime Minister and cabinet to “pull you heads of out of the sand”.
“It’s going to go ahead,” he says. “It may be delayed but reform of insurance is going to go ahead. We may get some tweaking around definitions of ‘lapses’…but the reality is high up-front commissions are dead”.
And that’s a good thing, Russo says. He says advisers should focus on the great relationships they have with clients and worry less about the negativity and poor press surrounding financial planning. Having said that, though, he adds that following the banning of a former Madison adviser by ASIC the group is adamant it will not suffer a repeat of that kind of headline.
Madison has re-engaged with the Financial Planning Association after a few years in the wilderness, and will have an increased say in helping the FPA set policy on a range of industry issues.
A global view
A whirlwind tour through the economic issues facing Australia and the word from Professor Warwick McKibbin. It’s the kind of presentation that defies reportage; so to summarise: it’s complicated.
McKibbin’s website – www.sensiblepolicy.com – is worth a visit for anyone who wants a deeper insight into his thoughts and his views. While the global economy faces challenges, the big, big picture is positive.
“There’s a lot of risks out there and a lot of things can cause problems,” McKibbin says.
“But if you look forward it’s a very positive picture. Pulling poor people out of poverty and poor countries getting richer has to be a good thing, if you can handle the environmental implications and disruptions to established markets.”
McKibbin says a big opportunity being missed at the moment is for the government to borrow money at very low interest rates to fund infrastructure – to “get access to global capital and build the supply-side of the Australian economy”. He says it’s a good idea to borrow at low interest rates and put the investment risk onto foreign investors.
“That’s a great opportunity for Australia,” he says.
“You need to get productivity up, and one of the ways to do that is have really clever investment in nation-building infrastructure.”
What keeps you up at night?
If you’re Tim Farrelly, it’s the prospect of a recession, and how fit the average investment portfolio is to handle that.
Farrelly is a panellist along with Roy Maslen, James Purvis and Warwick McKibbin addressing “what keeps you up at night, and how to get some sleep”.
Farrelly is concerned that we may be approaching a point where a recession is possible in the coming year or two. A typical investment portfolio is heavily skewed towards equities, and to banks in particular.
“Banks and recessions do not go well together,” Farrelly says.
The result of his analysis is that a recession is possible but not probable, he says, and if it happens it will be mild. It won’t be a disaster for equities, and it won’t be a disaster for banks, in particular. So that’s OK then – and Farrelly can sleep soundly.
James Purvis says that not much keeps him awake. Having too much in equities or bonds when markets are falling is one thing. Having too little on bonds or equities when markets are rising is another. But the big thing is getting distracted from long-term investment objectives by short-term issues.
Purvis says financial planners should never lose sight of the fact that “the percentage you have in equities in your portfolio is the first, second and third priority”.
“Everything else is much else important,” he says. “The key thing that will drive long-term prosperity for clients is how much you maintain in equities over the long term.”
But you have to find a way of dealing with volatility, Purvis says, and then you’ve got commentators talking to consumers about daily share market movements, that’s a communication issue for financial planners.
And getting communication solutions wrong is something worth losing sleep over, Purvis says, because it you do that you’ll be adding to clients’ anxiety, not reducing it.
Thank you for your concern
A concerned reader has forwarded an article pointing out why Canberra doesn’t deserve the reputation that it seems to have for being boring. It’s cold, for sure, but Professional Planner hasn’t been here long enough to be bored yet. The reader notes that the article is dated 2009 – six years is a long time for things to devolve towards tedium.
They call it Stormy…Thursday
On queue, as PHAROS’s risk and professional standards manager Cheyenne Walker takes the stage to provide a compliance and regulation update, the weather turns. The sun has gone and the clouds are rolling in. Walker says she expects a full-on storm to be whipped up by the time she’s finished.
All you zombies
Financial planners often spend too much time and effort trying to find new clients when they have a ready source of potential new clients already right under their nose. Or maybe even on the nose: business coach Steve Salvia describes them as “zombie clients”.
Salvia says he identified zombie clients in his own client base by segmenting them on two criteria: the income they generated for the business, and the strength of the his relationship with them. This creates a four-quadrant chart, with A-class clients in the top right, B-class in the to left, C-class in the bottom right and D-class in the bottom left.
And the zombie client are the C-class clients: they’re not producing as much income as A-class clients, but there’s already a good relationship with them. This is where planners should start.
And then there are techniques to get them to respond.
“Stop thinking like financial planners, and start thinking like people,” Salvia says.
He says people are constantly either moving away from something that frustrates them or that they fear, and towards things that they want or aspire to. To get a response, you have to be able to identify better than they can for themselves the things that frustrate them or which they fear.
“If you can do that,” Salvia says, “you’ll automatically and subconsciously be credited with having the answer.”
Salvia recommends SPEr emails: short, personal and expecting a reply – which generally can be written in no more than 10 words.
Or…
Take the sociability test
…you can become a social media guru, and taking us through the basic steps are Jessica Gwynne from Client Kiosk, and soon-to-be-from-Client-Kiosk, Georgia Lane.
The purpose of social media is to demonstrate your area of expertise, Lane says.
She says it’s difficult for financial planners to find time to do everything they need to do now, let alone add a comprehensive social medial program over the top of it, but there are simple steps that every financial planner can take to make their social media presence as effective as possible.
Lane says there are compelling reasons to be engaged with social media. But she recommends a back-to-basics approach, and not spending a cent on doing anything until it’s clear why you’re doing it, who you’re trying to target, and the kind of client you want to reach.
LinkedIn is the number one social media platform for financial planners, but Facebook cannot be overlooked.
Lane says financial planning businesses have traditionally grown through referrals. Social media is a way of generating referrals 24/7 – she says it’s like having a person on your payroll dedicated to finding potential new clients.
It can be precisely targeted at the sorts of clients you want to attract, and you can measure the success of your targeting.
A warning: You must have “a great LinkedIn profile”. Lane says.
But to be most effective you must attain “all-star” status, she says. To do that, the starting point is a photo – “of you, looking like the client would expect to see you in the office”.
“Put a very good summary in your linked in profile,” she says.
“Not regurgitating your qualifications – it’s more about you, what you’re passionate about, going back to the problems you solve.”
Lane says the number one reason you should be on LinkedIn is because it’s what potential clients will see first if they search for you on Google. But if you have not set up your profile properly, you may not come up in a search at all.
Moving on to Facebook, Gwynne says there are 14 million people using the platform, which is why your business should have a presence there. Australian adults spend an average of 1.7 hours a day on Facebook, and the fastest-growing segment of users is aged 45 plus.
“The people you want to talk to will generally be on Facebook,” Gwynne says.
She says it’s a direct-to-consumer platform – but email remains the best way to sell to consumers, so the most effective use of Facebook is a means of gathering relevant email addresses.
Like LinkedIn, advertising on Facebook can be targeted precisely, and it’s also en effective platform for demonstrating to potential clients that you know what you’re talking about, and that what you’re taking about is relevant to them.
Echoing Steve Salvia’s earlier session, Gwynne says Facebook is way to demonstrate to clients you can address their fears and “pain points” and solve their problems.
Doing something relevant
Specialised advice on aged care is as natural a specialisation in mortgages, risk advice or SMSFs, and it’s driven by many of the same factors.
Andrew Keay came to the aged care sector following a career in funds management, and after exploring different options in the advice space. A chance encounter with a client facing aged care issues convinced him it is an area where more advice is needed.
He’s found fertile ground working with financial planning practices to provide specialised advice to the parents of the advisers clients who re aged around 55. He says many financial planning businesses aren’t keen on spending the time it takes to become fully familiar with he aged care system and its complexities, so most of his business comes from referrals – he’s also a “non-threatening” partner, because he’s not competing with the planning forms for other aspects of advice requirements.
Keay says the main aim of an aged care service should be to present clients with “options, so they can make an informed choice about what they are going to do with their parents”.
He says being able to offer aged care advice – either in-house or by referral to a specialist – is a way for financial planning businesses to engage or re-engage with a portion of their client base.
And there are some stunning statistics to support Keay’s case. For example, by 2031 the population of NSW will increase by two million, and of that number 40 per cent will be aged 65 or older. The proportion of the NSW population aged 85 or older will double.
He says it’s been estimated that there will be an additional 82,000 aged care facility places needed by 2020 – which would require 2.5 100-bed facilities to be built every week between now and then.
The demand for specialist advice on how the system works and how to ensure aged people get the care they need is only going to increase – and dramatically.
Do or die
It wasn’t lost on Andrew Keay (above) that his session on commercialising aged care offerings was a lead-in to Steve Vamos’s session entitled “Do or Die”.
Vamos says the thing that will define the future is the capacity of people and organisations to change. Those that can’t or won’t change will die. And it can be a slow death or a fast death, but it will still be death.
“In looking at yourself as a professional…I’m going to put to you that change is the main game. It’s not the thing that happens in the margin any more,” Vamos says. “I’m also going to put it to you it’s a human game.”
He says technology itself doesn’t innovate – yet. Technology isn’t disrupting anything – people are.
Vamos says smart companies recognise that what to them to where they are today, and underpinned their success to date, is not what’s going to get them to where they need to be in the future
The key question is: “What is my capacity as an individual and the organisation I work for as a collection of people, to change?” he says.
“And it’s really hard. We’ve been wired for a long time in a very different way,”.
“Most of us were hired to do as we were told.”
Vamos says humans are the most important assets of businesses, but how people work, and how they relate to each other, is changing. The two most important aspects are knowledge, and connections. It’s not good enough to have knowledge and not be connected; and it’s not good enough to be really well connected but know nothing.
“You are not an island,” he says. Your business is networked, internally and externally; and the value of your business is a function of the knowledge and connections of the people in the organisation.
That demands a different style of management. The old style of control, never making mistakes and always knowing the answers is being replaced by a philosophy of enabling others to succeed, helping and caring for them; trying new things and being prepared to fail; and being open to learning new things.
“You have got to appreciate that the world is changing,” Vamos says.
“Your capacity as an individual to change or stay new…will define you, not your age. Your age will become less relevant. What will define you is your capacity to change.”
And that’s it for Day One. Back tomorrow.
