On the ground floor of AMP’s Circular Quay headquarters in Sydney there’s a wall of frosted glass that the city’s commuters and tourists wander past in their thousands every day, unaware that behind the glass and in the office tower above, a revolution in financial planning has been quietly underway.
Behind the glass lies AMP’s flagship Goals Explorer Centre: a bold exercise for the financial services giant in embedding objectives- or goals-based financial advice into how it services customers, and supporting it with a robo-enabled advice offering.
The centre is a physical manifestation of a 21-month project that combines providing advice to clients on their own terms and using technology to make the advice process simple, painless and productive, all under the banner of a new advice business, AMP Advice.
AMP’s group executive, advice and banking, Rob Caprioli (pictured), believes it could help crack one of the financial planning industry’s apparently most intractable issues: how to lift the number of people who use a financial planner above the current, longstanding figure of about two in 10.
Even as the largest financial planning business in the country, AMP has made a modest start, with 11 practices operating under the new approach, and perhaps twice that number again set to come online in coming months. But it is perhaps uniquely positioned among financial planning businesses to make an impact, with a re-engineered advice process. Having built it, however, it has to attract enough new customers to justify its investment.
“That’s the great challenge that we have now,” Caprioli says. “Earlier this year you would have seen us start with commercial advertising around our Goals Explorer. That’s started getting people’s awareness of AMP leading the goals-based advice model. You can actually go onto our website and start playing with a light version of that Goals Explorer. For our 11 sites, we’re about to launch some further advertising in the areas where those sites are located – media, billboards and probably even in cinemas.
“And increasingly over time, as this gets more traction, I suspect our above-the-line marketing starts to increase as well.”
Not relying on advertising
But too much time and expense has been invested in the new approach for Caprioli to be relying only on advertising to encourage people to walk off the street into one of a handful of new advice centres.
“We also have a large corporate super business, where we have over 60,000 employers and all their members,” he says.
“We are now starting to have an experience where we can start to take these propositions to that employer group. And then finally, through our online capability and our analytics capability, we can start engaging those who are not engaged. So there’s a whole strategy here that underpins the goals-based model, where we have many ways of connecting and engaging through different channels.”
AMP isn’t alone in embracing goals-based advice, and it’s not even the first. But it is by far the largest advice business to think through and then implement the tools and processes that are necessary to support advisers.
In the foreseeable future, AMP Advice will run in parallel with AMP’s other businesses – AMP Financial Planning and Charter – and ipac will eventually be fully absorbed.
“What we’ve said to our network all along is this is an additional model,” Caprioli says.
“It has leveraged, obviously, the experiences that a lot of our good advisers already do today, plus the other research we have done. So we have positioned it very clearly with our network that this is an additional model and hence we’re standing up the AMP Advice business model in parallel or in conjunction with.”
Caprioli says existing AMP advisers will be offered the opportunity to move to the new model.
“We’ve said to them it’s actually your choice, it’s your choice to come across,” he says.
“And like anything that’s new, there is a bunch of people in the network who may be early-adopters, fast-followers, late-adopters and potentially [some who] will never come across. And that’s okay. What we’re saying to advisers is a) it’s your choice; and b) give yourself the time to understand the model. What we’ve found is those who’ve spent more time understanding the model have become increasingly excited about it – yeah, I get that; it’s much more engaging; it’s more efficient for our business.
“Having said that, it’s still early days. The proof points in terms of the efficiencies and the benefits of the model are still to come. We’re seeing positive signs, in terms of advocacy and engagement, but certainly more time is required to be able to say from an efficiency perspective, here’s the value to you, the adviser, in your practice.”
Moving away from product-related adviceIn mid-October the co-founders of the renowned advice and technical consulting business Strategy Steps, Louise Biti and Assyat David, announced they were selling their business to the KnowIT Group, headed by Wayne Wilson, a former managing director of Rubik’s wealth division, head of Asgard and Advance Asset Management, and group executive in charge Perpetual’s private client division. Biti says the sale was driven by two factors: one being the need for Strategy Steps to be migrated to a new technology platform and its reach extended, KnowIT’s speciality; and two, to enable Biti and David to focus on helping financial planners implement true strategy-focused, goals-based advice in the area of aged care. Biti says that while there’s a lot being said about goals-based advice at present, advisers have on the whole been slow to adopt it. “There’s still a lot of work to be done in moving from product-orientated advice and solutions to clients, where they see their role as being a knowledge expert, to working more with clients to understand the focus on goals and objectives – not just in a money sense,” Biti says. “We see a transition of advisers from being just knowledge-focused and being seen as the experts, to being nearly consultants or project managers that work with clients to have facilitated discussions about what’s important and what needs to be achieved, and then being able to work with them to make informed choices.” Biti says advisers’ tardiness may be put down to a combination of things: being slow to realise that the people want to receive advice differently from the way it’s traditionally been delivered; and a lack of tools and processes to help advisers change how they operate. “The amount of change means they spend a lot of time focusing on the details of legislation and the rules,” she says. “A lot of the learning they are given comes from a product focus and a lot of training is product-focused rather than stepping back and defining what is the role of a financial planner.” Biti says the restrictions created by that sort of background are more obvious in aged care advice than almost anywhere else. “Aged care is purely about strategic advice for a family situation and helping them make choices,” she says. “It’s not about saying here’s your best path or direction, or these are the products you can invest in – because often there’s no product out there. “What we’ve seen is just the difficulty that advisers have had to really embrace that as part of their business operations. They have still been focused on products and product solutions and the amounts of money that clients have.” David says there’s been an economic hurdle for advisers and licensees to clear as well. “The industry very much has always been [focused] on product, and unfortunately I think the other part of it too is historically the revenue that comes from a lot of groups is based on product or platform,” she says. “And being able to strip away from that is really hard for a lot of them. “It’s always been a bit of clash between: this is what drives the revenue or the profits of the dealer group to some degree; and on the other hand, clients have been demanding more strategic stuff – tell me what I should do with my finances generally. “We’re starting to see certain groups – AMP has been talking about more objectives-based advice, and Clearview and Fortnum and groups like that – are very much about thinking about the objectives of the client and trying to help them, and their processes have all changed.” – Simon Hoyle |
Behind AMP’s new goals-based advice approachA feature of AMP’s new advice business, AMP Advice, is the physical reinvention of financial planning practices as Goals Explorer Centres – in an earlier iteration they were referred to as Spark Stores – that incorporate new technology and advice infrastructure. The centres feature a concierge to welcome customers, and coaches to assist customers with the use of goals explorer technology to identify and prioritise goals. AMP has identified 29 common goals as potential starting points for customers to choose from, and they can define their own goals if none fit. Customers are handed on to an adviser only if they want to delve more deeply into the strategies that may underpin achieving their nominated goals. AMP’s group executive, advice and banking, Rob Caprioli, says the Goals Explorer Centres are designed to be welcoming and relaxing, and customers are “greeted by people who are not there to solve their needs immediately, but actually to be engaging and listening”. “And finally, the thing we had to address for both our customers and advisers was to make it simple, to streamline the process,” he says. “And so that’s where you start to look at the technologies and how do we leverage the touch screens and the business rules that sit underneath the technology? That makes it fairly seamless for the customer, because we’re not bombarding them with a lot of information and a lot of jargon upfront. But secondly, it also makes it much more effective and efficient for the adviser – the goal being that if we can do that, an adviser can spend much more time seeing more customers, not managing the compliance process and managing all the complexities associated with today’s model. “Then there was the realisation that to actually make this happen, there’s a lot of things we’re going to have to do. So the first few years we spent a lot of time building what I call below-the-waterline infrastructure that is required to support this process – things like having the single view of the customer; being able to capture all these interactions we have with a customer into a single place; being able to run various different sorts of analytics across those profiles to identify the goals that are most relevant; lots of different examples.” Caprioli says that even after all of this, there was evidence that customers “still didn’t get it”, and so the concept of a physical presence was developed. “We needed to build [what] used to be called the Spark Store and is now called the Goals Explorer Centre, and we found that to be really important, because then we could physically show people what we’re talking about,” he says. “That made a world of difference, and it was almost like the penny dropped. As soon as you come in, feel the space and go through the process, people started to realise what we were talking about, in terms of a goals-based advice model that is very different from typically what happens today.” – Simon Hoyle |
