It’s a well-trodden statistic, but worth repeating. Less than 10 per cent of adult Australians use a financial adviser. And even among the top 20 per cent of the market by value, only a third of people have used a planner or adviser in their lifetimes.

In an Australian financial planning industry already facing significant disruption from technological-led disintermediation and the commodification of investments, these latest insights from a Roy Morgan survey are sobering.

And recall that this survey was undertaken before the findings of the Hayne royal commission were published. The existential plight of the industry has arguably worsened since.

Asked why they do not seek the counsel of a financial adviser, people frequently cite cost. But possibly what they really mean is they do not see value in the service.

Keep in mind that, according to the household expenditure survey, this is a country where people spend just under $15 billion each year on alcohol (versus $1.6 billion on tea and coffee) and nearly $66 billion a year on their cars (versus $2.7 billion on public transport).

So we are not talking here about an inability to afford advice. We are talking about a feeling among the general community that advice does not deliver real value.

How the advice sector overcomes this issue is not primarily through automation of now commoditised services – though that it is part of it. And it is not primarily through re-establishing trust and transparency – though these are necessary preconditions for renewal.

I strongly believe the most fundamental change is going to come through a complete reframing of the value proposition for advisers. This involves shifting the focus of firms from below-the-line to above-the-line activity, from money to meaning, from product to people.

Of course, investment portfolio returns are important, as are tax management and risk and cash-flow modelling. But these are inputs, not outputs. What we are selling, what we are providing in the clients’ eyes is security, peace of mind and a sense they that will be OK.

Another way of looking at this below-the-line verse above-the-line concept is the left brain versus right brain idea. The left brain, where many advice firms pitch their client communications, is methodical, analytical, and numbers-based. The right brain is more intuitive, thoughtful, subjective and emotion-based.

Of course, you need both to live in this world successfully. And an advice firm that based its entire proposition on telling stories and focusing on emotional triggers, at the expense of rigorous analysis, is not going to stay in business long.

Think about an automotive manufacturer. A car’s technical specifications – torque, compression ratio, and horsepower – are all important variables. But beyond the petrol-head community, they are not what sells the vehicle. That’s more about reliability and comfort and the sense of freedom and independence that having a car can bring.

So when it comes to advice, the issue is really about getting to the questions lying beyond the purely material and technical concerns and having conversations that help us understand clients’ deepest motivations and values. That way your below-the-line offering is in service to something the clients really value.

Practically, what this reframing involves is a change in language, a change in emphasis and a more structured and consultative discovery process. The end benefit for clients is they get to lead richer lives – their best possible live. For advisers, this ‘life-first’ approach is something no robot can deliver and one that can provide a long-term platform for growth, and a much more fulfilling career.

For the doubters and sceptics, think about this: Arguably, the rate of change we have been seeing in our industry in the last few years will be the slowest it will be for the next 20 years. This disruption is not ending anytime soon.

Regulation will become more onerous. Compliance costs will rise. Education requirements will increase. Cost pressures will intensify. You can take all that as read.

But on the plus side, we know there is a market for this more holistic advice offering. Survey after survey tell us that what people want is advisers who understand them, who can help them untangle the psychological and emotional aspects of money and who can establish a platform that allows them to live their best possible lives.

That’s where the value is.

David Haintz is founder and principal of business-to-business consultancy Global Adviser Alpha. He is a CFP and a past director of the Financial Planning Association of Australia (FPA), where he was instrumental in the push for professionalism. David has had a 26-year career with his own firm and subsequently became a founding director of Shadforth Financial Group. He departed Shadforth in 2015 and established Global Adviser Alpha.
2 comments on “‘Life first’ advice transcends cost”
  1. Good article David. We share your perspective on this.

  2. Avatar Daryl La' Brooy

    I believe one of the reasons more people aren’t seeking advice is because they are able to get by doing it themselves. These DIY people are not sure how advisers can improve their situation. As long as the DIY cohort believe they can meet their expenses and get on with life there is no compelling need to seek advice.

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