The rapidly changing face of financial advice has left some licensees struggling to keep up with the needs and demands of the advisers they authorise. For some, the evolution of advice and an inability to adapt means their medium- or long-term prospects are potentially bleak. If the most valuable thing they offer to advisers is an AFSL, or a standard set of largely administrative services, they really don’t offer anything at all to set them apart.
As advisers’ needs and the needs of their clients change, licensees need to change to remain relevant and to add value to advisers’ businesses and to their advice. Clients of the future don’t necessarily look like the clients of the past, particularly as a wave of baby boomers approach the retirement shore. The advice support and the business services advisers will need to deliver doesn’t necessarily look like it did in the past, either.
When asked, most licensees say they’re adapting to the needs of advisers, but CoreData Research senior consultant Grahame Evans says the only people who really know if a licensee model is relevant and truly supportive of advisers are advisers themselves.
He urges advisers to take part in this year’s research to make sure licensees get the message, so they can identify what needs to be improved and take steps to do better. But if advisers remain silent, nothing will change.
Understanding advisers’ needs more deeply
Evans says the annual CoreData Licensee Research reveals the strengths and shortcomings of licensee offers through the eyes of advisers. For this reason, it’s invaluable for licensees seeking to support advisers better and understand their needs more deeply, and advisers’ needs are driven by the demands of clients.
“[Clients] are moving very much towards being involved in the process,” Evans says.
“We’ve moved from a world in the old days of advice of ‘tell and sell’ to an environment of ‘uncover, discover’. They want to be part of the decision, and they want to understand what is going on and own that decision, rather than being in this vacuum and just purely trusting advisers.”
Evans says this change has fundamental implication for the systems, processes and support advisers need from licensees to deliver relevant, timely and valuable advice. But without tapping into the insights of advisers and understanding how the client relationship is evolving, licensees are fumbling around in the dark.
If advisers don’t tell licensees what they need, they can’t expect anything to change.
“We can use AI to produce statements of advice and improve efficiency,” Evans says, but that’s focusing on the wrong thing – or, at least, not on the bit that is of most value to clients.
“Licensees have in many cases provided administrative processes around compliance, collection of revenue and continuing professional development,” he adds.
“But the focus around the client engagement process becomes more important. The licensee needs to start thinking about moving its focus from just the back office, if I can call it that, to work with advisers to embrace the client’s experience. They need to do more of that and get better at it.”
Giving licensees a clearer view
Evans says the Licensee Research is an avenue for advisers to tell licensees what they want and need, and for licensees to get a clear view of the services and support they need to develop for advisers.
“If you consider the amount of time, money and effort put in to meeting legislative requirements – even just since the [Hayne] Royal Commission – and if we could have put that time, effort and money into the customer experience, imagine what we could have had by now.”
Industry-wide research is a way to capture a diverse set of adviser views and opinions to feed back to licensee businesses. But Evans stresses that to be effective, it needs the support of advisers.
“There’s a whole lot of unknowns and trying to get people to give us that feedback is really important – research like this is really important, because we start to get a better picture of that future,” Evans says.
The Licensee Research creates a link from client to adviser to licensee, allowing an alignment of services and support from licensee to adviser, to allow advisers to better serve clients.
But the foundation of the required changes in support for advisers is “what advisers are hearing and seeing from dealing with clients on a day-to-day basis,” Evans says.
“They can convert that into what they need from their licensee, what [clients] are telling advisers and how that converts into what the adviser sees as important – and from that perspective, what the [licensee] industry should see as important.
“But how does the licensee know? How do they know what they don’t know?”
The biggest issue I had for years with Licensees was their inability to clearly articulate WHY the process they insisted on, which in many cases made little sense and was a massive time wasting exercise, was continued, driven by compliance and audit teams that were incapable of answering basic questions around relevance and even under what sections of law or Regulatory requirements this impost was based on.
Licensees inability to question the relevance of their own processes, due to them not having the courage to question the dogma that their Legal Advisers pushed onto them and then their Audit teams who would follow due process without properly listening to feedback, or bother reporting back with clear and concise reasonings after reading Adviser input and suggestions, was the source of most frustration.
Why did this occur?
The answer is very simple.
Licensees are terrified of Regulation. They do not understand how it all works in a cohesive manner that makes sense and is Business friendly.
They are not game to put their Legal and audit teams under pressure to make their Regulatory and audit processes, more Advice process driven.
I am yet to meet any Manager in a Licensee or Insurance Company, or even for that matter, Lawyer or Audit specialist, that can stand up publicly and say they fully understand the intricacies and cognizance of what it is they do, that passes the common sense test.
Licensees, Advice practices and Advisers are held to ransom by the Regulations that have been proven to be major road blocks.
Licensees need to listen to experienced Advisers, then question their own teams about what it is they do and how could the Licensee be made more client and Adviser centric.