Advisers and business owners trimming or capping their client registers in light of fee-for-no-service revelations from the Hayne royal commission probably have outdated business models, according to Map My Plan chief executive Paul Feeney.
The former Credit Suisse private banker and financial planner, who started a company to develop what he describes as a client-centric financial roadmap tool, believes using technology to enable advisers to dip in and out of their clients’ lives helps them to scale their services.
While Feeney has built a technology solution to enable advisers to reach more Australians, he says most existing advice technology has been designed to anchor advice to product.
“The only way you can provide advice to more people is by using technology, but the problem is advice technology has either been product focused, or has been designed around adviser productivity and compliance relating to face to face advice only,” he says.
“When we have technology designed around the needs of clients, advisers will no longer be limited to 100 or 200 clients; there is no reason they can’t have 1000s of clients,” Feeney tells Professional Planner.
What’s advice about?
While Michael Hodge, the QC assisting Commissioner Kenneth Hayne in his investigations, pressed witnesses on the number of clients advisers could be expected to adequately service during the financial advice hearings in April, Hayne’s final report didn’t weigh into what an appropriate number of clients per adviser might be.
Hayne did, however, highlight cases where the advice licensee’s records showed they knew that an adviser “linked” to ongoing service fees had so many clients that he or she could not possibly have provided ongoing advice. These instances were used by Hayne to call out fee-for-no-service and define more contemporary rules around ongoing service arrangements.
Limiting the size of a client book to 100 or 200 clients is emblematic, Feeney reckons, that many advice professionals have forgotten what advice is actually about. Feeney points to conversations he’s been having over the past year-and-a-half, particularly within the larger advice networks.
“The industry has gone through a royal commission and straight away you’ve got different parts of the industry coming out and fighting to preserve what’s in the best interests of advisers. It’s time they stepped back and said: ‘What would be best for the client? Let’s be the client’s champion,” he says.
“We assumed when we started out the biggest traction would be from the adviser community. It wasn’t. Advisers are slower to take up this technology. Employers understand there is an impact of financial stress in the workplace and they’re the ones looking for solutions,” Feeney says. He adds that some recent conversations with medium sized and boutique licensees have resulted in pilot programs which will be revealed in coming months.
Map My Plan is designed to create an alert when a short-term situation arises the financial adviser can help to address, such as a death in the family or an ominous credit card bill. Map My Plan has its own Australian Financial Services License but Feeney says the system won’t enable to direct sale of investment products.
Further, looking beyond individual advice practices, Feeney notes that walking away as an industry and as a burgeoning profession from providing people with personal advice, at a time when a high proportion of Australians are under financial stress, is the wrong approach.
“By walking away from advice, the banks are saying it’s too hard to give personal advice to anyone, so they’re not going to give it to anyone. This at a time when half or more of the population of working Australians are under financial stress,” Feeney says, citing research Map My Plan has conducted around the financial well-being of Australians in the workplace.
Examples of where product-centric rather than client-centric advice technology is being used is prevalent, not just within bank networks where the royal commission focused its attention, Feeney says.
“In the same way as the banks, industry funds have an embedded conflict in that they people to put more money into super. For example, will advisers in these networks ask clients whether they have ongoing credit card debt? If they do then the advice should not be to put money in super… it should be to pay your credit card off,” Feeney notes.
Some advisers within traditional advice networks are looking past the current business models, Feeney reckons.
“It’s advice practices that are thinking they should be able to give advice to 1000s of people, not just hundreds of people. They’re the ones are future-proofing their businesses,” he says.