Michael Blomfield from IRESS and Clime Investment Management CEO Annick Donat

Licensees and advice practice managers are doing the industry a disservice by expending resources on things that don’t add value to the end client, and should focus more on advisers and their professional development according to a panel at the Professional Planner Licensee Summit in Katoomba Monday.

“My view is that we’ve historically invested highly excessive sums into what, in the end, is competitive parity, and there hasn’t been enough capital allocated to competitive advantage,” said IRESS chief commercial officer Michael Blomfield.

Standardise the parts that don’t make a difference, Blomfield explained, and prioritise the stuff that does.

“With financial planners the competitive advantage comes from them as a human, their empathy, their intelligence.. and the way that they interact with clients to create better outcomes.”

Sharing the panel, Clime Investment Management chief executive Annick Donat said this misallocation of resources could be seen on a high level in the way people interpret regulation. “We all have the same intent, we all just have really different expensive lawyers”, she said.

On a lower level, the same misallocation is evidenced by the different templates licensees and advice practices spend time creating. In the end, she says, none of that really benefits the end client.

“How many people think they’ve got a fact find like the person sitting next to them, unless they work in the same company?” Donat asked the audience of licensee heads and advisers. “Not one… that’s scary.”

Donat said industry participants are all speaking the same language but using different dialects. The different interpretations means too many parties are creating processes from scratch that should be standardised across the board.

“How an adviser interprets information is different from how a licensee interprets information, and that’s different from how a product manufacturer does and so on and so on through the value chain,” Donat commented.

According to Blomfield, a fact find does not present a competitive advantage.

“The competitive advantage is more likely to come from the quality of the adviser, the way they engage and guide a client, the way they listen,” Blomfield told Professional Planner on the side lines of the event. “But not from the actual process.”

Figure out what matters, Blomfield said, and you’ll know where to spend your time and money.

“We’re talking about finding a way for the industry to isolate what adds value and what adds advantage and what doesn’t, and then to invest in the things that don’t by different means than the whole capital allocation that’s happened historically.”

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
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