Like many financial advice practices, Covid-19 has become a bit of a line in the sand for Profile Financial Services, according to the advice business and licensee’s general manager Lena Ridley.
After the pandemic hit in March, Profile spent some time in “survival mode” but has since moved to think strategically about the business’s future, which has led to Ridley and the business leaders reevaluating its identity and how it operates.
Ridley admits she deliberately made the decision to get out of survival mode and back to growth by tightening market segmentation and providing great service. The firm is focused on growth, with the potential to purchase another firm or a merger being considered, Ridley reveals.
Ridley joins CoreData’s Simon Hoyle and Conexus Financial’s Matthew Smith to open Professional Planner’s new podcast series – The shape of advice. Listen to the first episode here.
Leaner in-house practices and a greater emphasis on clients to add greater value has translated to instant profits and better service for clients. Profile Financial has outsourced some administrative tasks to the Philippines, reducing costs, she reveals.
“As an industry, we have transformed a hell of a lot since the 1980s and 1990s, and we will continue to do so. The pace of regulatory change goes up and down, and we’re riding a wave of digital transformation which will affect lots of areas of our business, and our lives,” Ridley says.
While online meetings have been common, some prospects still want to come into the office and look the advisor in the eye to get a sense of them early in the relationship, she says.
“We spend a lot of time with the 12 advisors in the business talking with them about their target client and ensuring the best advice match for their personality in a bid to ensure customer retention, she says.
“We’re also spending a lot of time thinking about how we might need to alter our statement around market segment, how we’re pitching value proposition to both clients and employees, and how we deliver that in a commercial, profitable way,” Ridley says.
Double down on your strengths
The crucial part of navigating change is doubling down on your strengths, knowing your who clients are, how you articulate value and whether it works for those clients or not, Simon Hoyle, head of market insights at CoreData, says.
There are a number of competing factors impacting how the Australian wealth management is evolving. Regulatory change, evolving professional standards, the Hayne royal commission, the impact of Covid-19 and new revenue models are forcing major structural change keeping the broader industry on high alert.
Hoyle has bear witness to the changes since he started writing about financial services and financial planning in the 1980s. He was courtside for the introduction of compulsory superannuation in the 1990s, which he says sparked a surge in demand for financial advice.
“Suddenly, people started to realise they would have to take responsibility and control for funding their own retirement, and they needed professional help to get that done,” Hoyle says.
This prompted greater scrutiny of the industry that had largely been left alone in the decades prior. Suddenly, financial advice and how it was structured and delivered was making headlines, and a wave of regulatory reform and professional standards followed.
“Simultaneously, there was a push that started to emerge from inside the industry to be respected and regarded as a profession, with new standards introduced,” Hoyle says.
Then Covid-19 hit, bringing with it a lot of corporate dismantling and significant shifts in the financial landscape, he says.
“The top tier is what we describe as licensees that have 500 or more advisors on the license, and the second tier is 100-499, and so it goes. And we can see advisors coming out of the top tier and aggregating in the second tier and the bottom of the market in growing numbers,” Hoyle says.
The top tier has lost more than a quarter of its advisors, and the mid-tier or the next tier down has grown by 6-7 per cent, while the bottom of the market has grown by more than 20 per cent, he explains.
Operate like someone is watching
Ridley has also witnessed broad industry change since entering the industry in the 1990s right through to today, where Covid-19 has contributed to industry-wide chaos many are trying to navigate.
The lessons came early for Ridley, who worked for a practice in Canberra, which was close to the Australian Taxation Office (ATO) headquarters, and also close to the Australian Securities and Investments Commission (ASIC).
“If they wanted to test something new in the market, they would go around to some of the financial planners in Canberra and knock on the door,” she says.
“That’s a lesson I’ve carried through my whole career. If you assume that ASIC is going to knock on your door and make your decisions based on that, then that’s not a very good place to start,” Ridley says.
Hoyle admits that broad industry change is difficult, particularly when it’s forced upon all rather than occurring organically from some sort of innate desire to change. But the fact is that regulatory reform hasn’t been driven by good financial planning firms, but rather by poor industry practices.
“I don’t think you’ll get too many people arguing that financial advice is going to be in a better position at the end of this process, whenever that process may end. Change is constant, but you’ve got to keep your eye on the endgame,” Hoyle says.
“But one thing that never ceases to amaze me about the financial services industry and the people who work in it is how adaptable and resilient they are, and how they’re able to deal with change.”