Happy New Year! In what seems like the blink of an eye, we’re back and the new year is underway. And what a year it promises to be.
There are several key pieces of new legislation in consultation phase, and if the government’s timetable is honoured we’ll see the final drafts of the bills, which will receive royal assent sometime during the year. And the sooner the better, frankly, because the changes will require a rethinking of strategies, advice propositions and structures for many financial planning and advice businesses.
But, as is always the case, it will be business-as-usual for a significant part of the profession – that part of it that has already adjusted to the demands for professionalism and higher ethical and education standards. For great businesses, 2016 will be a year of opportunity, rather than yet another year of adjustment or transition. It will be a year when the foundations are laid for a financial planning profession, and those who are ready will start building on those foundations, free from the distractions of renovating their existing businesses.
There will be a period of adjustment, naturally, and a period of uncertainty as the political process wends its way towards some sort of conclusion. Professional associations will, potentially, be busily working with government to address some of the more egregious unforeseen circumstances of some odd drafting of the new laws; but the core of the changes is sound.
Having already given us their review of 2015, our hand-picked panel of experts now outlines what they believe the year ahead holds.
Do you agree with them? Do you have a different view? Use the comments section at the bottom of the article to let us know what you think.
The institutional licensee
Neil Younger,
General manager – advice, ANZ Global Wealth
The future of advice needs to be human-led and digitally enabled.
The digitisation of the advice process will empower planners to create a higher level of engagement with potential and existing clients, allowing them the time to invest in their point of differentiation – providing personalised, tailored advice.
Examples include engagement tools, Statement of Advice automation and workflow tools, which are critical to unlocking opportunities with Australians who currently don’t seek advice.
Digitisation will enable advisers to lower their costs, meet higher standards consistently and be able to raise the overall quality of advice.
We are rolling out a number of new engagement tools to help advisers with their clients. We are also working on a new framework around advice, which we will begin testing in the business throughout 2016. We look forward to sharing the details over the next year.
We believe that managing risk profile will be one of the critical factors influencing the year ahead.
Producing tools and providing support to our advisers so they can grow new revenue streams, maximise existing ones and harness new technology to generate profit will also be a key factor.
It’s essential to ANZ Wealth to continue to build new technology and opportunities to support our advisers, as this is a key component of the licensee value proposition and a necessity for ongoing viability.
The non-institutional licensee
Rod Bristow
Managing director, Infocus Wealth Management
We will, of course, see obvious industry changes that will flow from enhanced regulatory scrutiny. More than one institution is likely to be evaluating return on investment from their advice businesses, with some hard decisions to be made with potentially significant impacts for advisers and clients.
The role of technology in effectively servicing national advice operations will become more prevalent this year, as dealer groups seek to leverage technology to more effectively monitor and supervise, as well as create differentiation in the marketplace with meaningful support for their advisers.
From an Infocus Group perspective, helping our adviser business partners grow revenue, increase efficiency and effectively manage risk remains a priority. As we have demonstrated through the implementation of the FoFA reforms, we are committed to helping our advisers manage change at both a personal and professional level.
We continue to invest in our industry-leading technology to deliver innovation via improved client engagement and advice processes.
We are also looking directly to the consumer and their wealth-management needs to ensure our approach, and that of our advisers, is aligned to consumer needs to constantly exceed expectations: building and rebuilding trust one conversation at a time.
I for one am very excited about the next 12 months and feel honoured to be able to play a role in the industry as it evolves and changes for the future.
The risk expert
Alexis George,
Managing director – insurance, ANZ Global Wealth
The need for specialist risk advice will continue, but how these advisers set up their businesses to deliver that advice for their clients may change. Some advisers may form partnerships by providing specialist risk advice to other practices whilst some may opt to move into the holistic advice space.
Appropriate life insurance still being an essential need for all Australians, specialist risk advisers will continue to be required.
Risk advice will continue to be a personal advice experience due to the nature of the solution being provided to clients, however the use of digitisation and technology will streamline and remove inefficiencies, thereby supporting advisers in their interaction with their clients.
We feel that the human element and value-add of providing tailored advice to each individual will continue to differentiate the offer from strictly online-only services.
Advisers are key to ANZ Wealth’s ongoing success, so we are setting an ambitious plan in 2016 to focus on product, service and technology to improve our overall proposition to advisers so they can operate more efficiently, deliver a better solution and assist them where it’s needed.
The association
Mark Rantall
Chief executive officer, FPA
2016 will see the passing through parliament of the education and ethical standards for financial planning and the Life Insurance Framework. In addition, there will be some minor changes to the Future of Financial Advice passed into law, such as extending the opt-in and fee disclosure statement reporting requirements from 30 days to 60 days to relieve some administrative pressure.
The new independent council that will set education standards, financial planning curricula, an industry exam, a professional year and an industry-standard code of ethics will be established along with industry working groups.
There will be much that financial planners will have to cope with. Changes to remuneration, business structures and potential additional educational requirements will occupy many financial planning professionals, whilst still focusing on looking after the clients they serve in a challenging global economic environment.
Early in the year I will pass over the reins of the Financial Planning Association to a very capable set of hands: Dante De Gori’s. After [I have had] the privilege of running the FPA for the past five-and-a-half years, Dante will take custody of the next phase of growth and evolution of the profession.
With a legislative tailwind, the industry should nurture, protect and grow the profession, at all times prioritising the client’s interests.
The financial planner
Sunitha Chamala
Associate wealth adviser, BDO Australia
2015 Gwen Fletcher Memorial Award winner
Australia’s ageing population and our ever-increasing average life expectancies will see more and more clients seeking professional advice and ongoing support to assist them in funding their lifestyle in retirement.
As advisers, a part of this will be the management of sequencing risk in the lead-up to retirement, and longevity risk post retirement. This demographic shift will also increase the demand for advice around aged care.
The new licensing requirements from June 30, 2016 will limit accountants’ ability to provide advice, particularly around self-managed super funds and superannuation, unless the proper licensing is obtained.
Advisers with expertise in these areas will be well placed to use this opportunity to develop new client relationships, strengthen professional relationships with accounting partners and ultimately provide clients with a seamless service.
A challenge in the year ahead will be navigating a volatile environment and continuing to draw clients’ focus away from all the noise and back to their established long-term strategy.
The super fund
Andrew Vogt
General manager – financial planning, First State Super
“Prompted by the findings of the Financial Services Inquiry, 2015 has been a year in which the role and purpose of both superannuation and financial planning have been debated at the highest levels of government. These debates, while highly useful, have prompted uncertainty for some nearing retirement, as well as those already in retirement. They have also increased the need and demand for trusted financial planning services, advice and products.
“The past year has also seen an increased need for aged-care advice, which has placed a further demand on financial planning teams, and for professionals with specialist knowledge and skills in this sector.
“As a profit-to-member fund we have sought to meet our responsibility to these evolving needs by: continuing to build the financial planning team, recruiting aged-care and risk insurance specialists; holding additional retirement and aged-care seminars; increasing our telephone advice offering; and by substantially increasing our regional footprint by opening member service centres closer to where our members live.”
The consultant
Ray Henderson
Partner, Business Health
In 2016, financial planning practices will be well served by focusing on staff and staff-related issues.
- Clearly, staff are a significant investment.
Across the industry, staff numbers have gradually risen to the point where the average practice now has six staff (including an average of 1.5 advisers) and an annual salary bill of around $426,000.
- 31 per cent of practices haven’t set performance objectives for the majority of their staff
- In 24 per cent of practices, the majority of staff don’t have documented position descriptions
- One in four practices have no structured approach to seeking staff feedback.
- Are practices truly invaluable to their “best” (“A”) clients?
We believe practices will need to invest more thought and effort into how they manage their clients.
- 37 per cent don’t hold, what we would view as “relationship building/retaining” data about their clients
- Only 24 per cent of practice segment effectively (in our view)
- Seven out of ten practices haven’t formally sought feedback from their clients in last 12+ months
- Only 43 per cent “touch” their A clients 10+ times per year
- Still one in three don’t have a clearly articulated value proposition for their clients.
- It’s time to think (and act) on transition
62 per cent of practices today are single-principal businesses, with the principal fast approaching 60 years of age
- 43 per cent say that their business could not operate at all without them
- 63 per cent of clients who completed the Business Health CATScan survey, say they would not be comfortable dealing with anyone else from the practice.
And yet, 48 per cent of Australian practices don’t have any key-person plan in place, while six in ten don’t have any documented succession plan.
The Adviser of the Year
David Reed
Retirement adviser, The Retirement Advice Centre
2015 AFA Adviser of The Year
Clarity on the education standards for new staff will be one issue that certainly needs to be addressed, and any existing staff whose education needs to be brushed up on.
We’re going to seethe Life Insurance Framework being implemented over coming years. That’s something we’ve been doing modelling on in terms of the impact on the business, [and] fee-for-service pricing for clients around that sort of offer.
From within our business, what we’re really trying to build is a community, and trying to grow that community but in a really “tribal” sense. One of the issues for pre-retirees is very much a lack of awareness: they understand what they are retiring from, but not what they are retiring to. What we want to spend a lot more time on is building a sense of community with those who have gone through that experience or are going with them.
We’ll host a lot more events, whether it’s online with webinars or offline with webinars, so people get a very heightened awareness. We’ll have psychologists speak, et cetera.
We focus around the money and we’ve got a determined and a little bit of a unique view of retirement planning in the financial sense. It’s all based on Texas Tech [University] and the Retirement Income Industry Association in the US, but nevertheless we spend more of our time now really clarifying with clients what their vision of retirement is likely to look like, and their values and meaning and the purpose of what they’re trying to build – we then almost tack on at the end the financial aspect.
We want that sort of tribal sense that we’re keeping each other in check from time to time.
