When Ashleigh Swayn and his spouse, fellow adviser Tanya Musgrave, sold their firm a few years ago, they had a twelve-month restraint period to figure out exactly what business they wanted to create.
They knew they wanted their new advice practice to be largely digital enabled, which would allow them to ditch the five offices they rented previously and shed a third of their old operating costs.
“The first thing we did was get rid of the offices,” Swayn says. “I can’t tell you how much it was costing, especially in Sydney.”
They wanted to provide a largely robo-enabled advice service, but they knew that wouldn’t work on its own. “Robo’ can’t really exist well in Australia because most of the money is in super,” he tells Professional Planner. “It worked in America but they don’t have a big retirement system like we do.”
Instead, they created a hybrid model, or what Swayn calls “something in between”; a full service advice practice employing tools commonly associated with robo-advice for on-boarding and investment.
The parameters of the advice were heavily scaled back to what the business could offer effectively using the hybrid model.
“We weren’t going to be able to do everything that other advisers do, so we said we weren’t going to do aged care, Centrelink or margin loans, we won’t do cash flow management at a micro level, we won’t do share trading accounts, family trusts or company accounts, and we won’t do SMSFs, which is a big one,” he says. “We just stuck to super, life insurance and investment.”
The stripped back model of the new business – Absolute Advice – meant prices could be comparatively low; 0.3 per cent ongoing for the standard ‘digital’ model and 0.6 per cent ongoing for the ‘plus’ model, which includes retirement and advanced superannuation advice. Both options incur a one-off initial advice fee of $390, with an extra $100 added per account up to a maximum of $590.
Limiting its service offering also enabled Absolute Advice to be more transparent and advertise its two-fee structures on its website in simple terms, as opposed to holistic advice businesses with more tailored, complex offerings.
Approximately 95 per cent of Absolute Advice’s clients are on a managed discretionary account agreement. The firm outsources investment committee services as well as most of its paraplanning and administration.
Swayn says clients can contact them anytime, which is something they do in in a myriad of ways. “If we’re in the area we’ll try to meet up in their office or at a café,” he reveals, “but face to face would be less than ten per cent of our contact.”
“A lot of our stuff is done by phone, but people contact us on messenger, facebook, whatsapp, imessage, text,” he continues. “The only thing we don’t really do is video. I don’t know why but clients just don’t seem to want it.”
Not for everyone
Swayn knows Absolute Advice’s model isn’t for every adviser, but argues that it fits an expanding slice of the spectrum; one that is growing in line with consumer demand. “There are a few more of us out there,” he says. “Certainly the younger advisers are thinking about different ways to scope down their advice.”
Similarly, he knows his advice service isn’t for every consumer. Many clients want the perceived security of an advice office and the comfort of knowing their adviser can cater to any advice need they may have. “We know we’re not going to fit everyone,” he says. “If someone needs all those other things then we’re just not the right fit for them and we tell them that.”
What the model does, however, is afford Ashleigh and Tanya the luxury of adventure. The couple spend around four months of every year “travelling the world, doing two to six week stints at a time”.
He says they carry their laptops and two 25-inch screens around with them wherever they go, so they can fit work around their travels.
“We’ve been about everywhere,” he says. “Last year we went to Western Europe; Amsterdam Germany, Barcelona, Portugal, France, then back to Dubai and Sydney. It’s fair to say the internet speeds overseas are better than Australia.”