Financial advice is a “really peculiar profession”, says Clayton Daniel, the founder of advice peer-to-peer network XY Adviser.
But it’s the strange nature of financial advice, the countless variables that go into investment, money management and tax strategy as well as the endless character quirks inherent in the clutch of clients an adviser serves, that make peer-to-peer groups so popular in the burgeoning profession.
On the second instalment of Professional Planner’s Principals in Practice podcast series, produced in partnership with BlackRock, Daniel explained how the tricky nature of the advice proposition is compared to other professions.
“Financial planning is this really peculiar profession where it’s not as codified as say, accounting or surgery, right? A surgeon knows when they cut open a body that they’re going to find an organ in a particular place,” he said.
“On the other hand it’s so difficult to nail down and say precisely ‘this is what financial planning is’, because from one planner to the next you’re never going to get the same methodology, outcome or results. And it’s the same on the client side of course, every client is different.”
The unique nature of financial advice as a service, he explained, creates a need for advisers to connect in a collegiate atmosphere and engage on issues they share.
“You’ve got this hugely variable demand and hugely variable supply side,” he said. “And because of that strange nature of financial planning, there is this – and it’s been happening for decades – this inter-peer-to-peer sharing of financial advice from one expert to the next.”
XY Adviser is a commercial, primarily online platform that is seven years old and has grown from 3,500 to 5,000 members in the last three of those years. Its members skew young at an average age of 42 and primarily use the dedicated platform to discuss ideas, tools and experiences.
That sharing is something seen in peer-to-peer networks across the entire industry in various forms.
Some are extremely small, such as The Alpha Group, a Melbourne-based collective of 17 mostly self-licensed practices that, according to chairman David Page, “runs on the smell of an oily rag”.
Then there is the Boutique Financial Planning Principals Association (BFP), which classifies as an industry body but functions as a peer-to-peer group whose members sign up for the opportunity to converse with other like-minded principals.
According to BFP president Angela Martyn, who is a principal at Melbourne-based Personal Financial Services, the $500 annual fee the group charges members “only covers expenses”. Speaking on the podcast, Martyn says the group has seen “significant” expansion in recent times.
“We’ve had about a 40 per cent growth of principal members and that’s probably because of two factors; one being the exit of larger licensees from the financial planning community and [the other being] people deciding they want to be self-directed and determine how they run their business model,” Martyn said on the podcast.
The BFP has now has about 400 advisers onboard, which represents 120 businesses. The group’s growth is another display of the value advisers in the modern Australian advice game are placing on the company of their peers.
“it’s purely a platform to learn from each other and share ideas, issues and support,” she says.
A lot of the chat on the BFP’s online platform is about the practical “day-to-day” of running an advice business, Martyn explains, as well as discussion about the latest industry news.
“But it could be anything from an esoteric financial planning query to seeking advice about a particular service provider, such as a compliance consultant or external paraplanner that other people use.”