The industry has done a good job of banding together on sympathetic issues during the Quality of Advice Review, according to a panel discussion, and that collaborative effort can lend itself to improving the image of the industry.
The roundtable, sponsored by AMP, discussed the two-fold branding issue faced by the industry: how does it better connect with Australians to show them the value of advice, while also attracting new entrants to fill the gap left by 12,000 advisers leaving in the last three years?
AMP Advice managing director Matt Lawler said existing clients valued the advice they get but that doesn’t translate over to potential clients.
“We haven’t been great at expressing that to new clients to get a new cohort that haven’t experienced [advice] to come through.”
Tupicoffs managing director Neil Kendall believes identifying how to articulate the value of advice is more valuable than a Statement of Advice.
“The advice we give is often not fully understood,” Kendall said. “The discussion that we have with clients and the value that we add is often missed.”
Because the general population isn’t understanding the value of advice this has the compounding effect of not attracting new financial advisers.
Moran Partners Financial Planning principal Paul Moran said he’s finding people don’t want to enter the industry because parents of university-age students tell them not to become a financial planner.
“We need to work hard at promoting what we do to that new cohort of advisers that might be coming through in the next decade.”
Without bringing in another 1,000 advisers a year, Moran said, the industry is going to disappear.
Lawler said the major benefit of the Quality of Advice Review so far has been the ability for the industry to speak with one voice, commending the work of the Joint Association Working Group submission.
“We’ve been guilty as a profession over many years of being very fragmented with how we engage regulators, but also the government.”
AMP licensee offer general manager Nick Hilton agreed and said the review is giving the industry its best opportunity to show the value of advice.
“It’s the absolute right time to remind people there are tangible and intangible benefits to advice, and they should be recognised when we’re trying to think about ways to simplify the advice process to allow more people to get to advice.”
Knight Management Services managing director Stephen Knight brought up advertising AMP did years ago about the value of advice and how that stood above other industry ad campaigns.
“Industry associations don’t have the dollars to actually put in like the CPAs have in the past, but perhaps the industry as a whole or individual product manufacturers could look at promoting that piece of advice,” Knight said.
Lawler considered whether the advice profession could come up with an advertising campaign to steer clients towards the right forms of advice.
“We’ve worked hard to restore AMP’s reputation following the [Hayne] royal commission and we’re starting to see some encouraging improvement,” Lawler said. “The advice industry more broadly has also worked hard to implement reform to rebuild its reputation.”
For this reason, Lawler said perhaps now was the time the value of advice should be promoted.
“While we’re going through the Quality of Advice Review we should be using this opportunity to keep reminding people about the value of advice because that will help us get more reform.”
CoreData head of market insight Simon Hoyle said because advisers aren’t “scratching around” to find clients the focus should be on industry perception for new entrants.
“You can advertise or create an image of a profession that you want to attract people to work in,” Hoyle said. “That requires a certain kind of communication to a certain group of people, but if you want to drive demand for advice and get more consumers to use advice that’s a different strategy and channel.”
Because advisers are well supplied with clients, Hoyle said, attracting more clients isn’t a priority while adviser numbers continue to decline.
“Address the supply issue first and prime the pump, get people in the industry now. Get them skilled up and ready to go and then drive demand to get more clients into those services.”
Servicing those that can’t be serviced
Rising Tide Financial managing director Matt Hale said he doesn’t see the cost to serve clients reducing dramatically which makes servicing clients with lower assets unfeasible.
“Particularly when my staff wages are going up 5.2 per cent every year,” Hale said. “Unless there’s a different way of delivering advice, we’re setting them and ourselves up for failure. We’re bringing in more people with an appetite that can’t be served.”
In the meantime, FMD Financial senior adviser Nicola Beswick said it was important for advisers to promote how they can help, even if they can’t in every situation.
“You don’t know who someone else knows, particularly when it comes from that client perspective, and they can become one of your biggest referral sources just off the back of that initial meeting. I’m upfront with clients and say when you get to this point this is when it’s good for you to come back.”
Beswick, who is also chair of the Pro Bono Financial Advice Network, said pro bono work can also play a part in helping the perception of advice.
“A lot of the [Hayne] royal commission and the damage that did from a reputational perspective, [pro bono work] really helps to articulate the benefits of seeing your adviser. Particularly for people who can’t afford it and need it when they’re going through a hard time.”
Story Wealth Management CEO Anne Graham queried how it was possible to prove value before the client steps foot in the practice.
“Clients come in through referrals, so they’re already partially committed but to the value of mum and dads who have never experienced an adviser and are wary, that is the key,” Graham said. “Not all clients need advisers, but they need advice.”
Graham said her practice is at the point where they’re clear on who they want to work with so they’re comfortable turning away clients.
“That’s quite a privileged place to be, but we’re providing more value to our existing clients because we’re not wasting time working with people who are going to be difficult to work with or that we can’t help or a time suckers. When you can say no to something you can say yes to something better and that’s a valuable thing to have.”
If you’re not first you’re last
Advisers also struggle to show immediate value and Knight found millennial clients often desired instant gratification.
“The problem an adviser is faced with is there’s a tunnel of time they have go through in terms of all the work they have to go through [in terms of an SOA] and that can take a month [or longer]. Those millennials want that instant gratification within a week or two if not the next day.”
Lawler countered this phenomenon extended beyond millennials.
“Financial planning is in a really interesting situation in that it does take us a long time to deliver advice,” Lawler said. “People are used to going online. They get their food and goods a lot quicker than they used to.”
Lawler said this perspective needs to be contemplated ahead of discussions with the government.
“Part of that is digital and technology, it’s open finance as well; getting access to superannuation and insurance information in the same way we get access to banking now. We’ve got to work on reducing that cycle time dramatically, while still maintaining high standards of professionalism. Otherwise we become obsolete because everything else is being done so quickly.”