Around two years down the track on a program to reinvent how advice is delivered to clients, Kearney Group chief executive officer Paul Kearney says the approach is beginning to show results.
“It is living up to what I dreamt was possible and shows very healthy signs of being a worthy model,” Kearney tells Professional Planner. But his path forward will look unlike most other firms’ plans for the future.
“I don’t look to the marketplace, and I know [they] say you have to look to the marketplace and who we would be competing with if we were to grow, [but] this is kind of not where I’m coming from,” he says.
“If this is worthy, this will find a way.”
Kearny’s re-engineering of advice is built on the insight that for most small business owners there’s little or no distinction between the business and the business owner’s household. For that reason, there should be no separation or siloing of the services provided to them.
It’s not so much thinking outside the square as redefining the boundaries altogether. Kearney has reorganised the resources of the business into “Integrated Advice Teams” (three IATs so far), each comprised of 15 or 16 experts, such as financial advisers, accountants and mortgage brokers, who work seamlessly together as a team of domain experts, contributing to the client’s requirements on as as-needed basis. Each IAT has the capacity to serve around 500 clients.
Kearney says most businesses remain “entangled” with their owners financially, emotionally and in terms of time commitment. Some reach a scale where they become disentangled, but “that doesn’t happen for a very long time and actually only happens to a few businesses”, he says.
“The households that are connected to small businesses [are] a really large part of the community and an important community segment,” Kearney says.
“My observation was that the clients we work with have just got a series of financial problems and need them solved and want them solved by people who they trust and who understand their story.
“So, how can you start from that lens, look at all the things that we do and gather it together so that the advice that was provided was what the client needed at the time, and was coordinated around an understanding of an overall strategy that the organisation understood, not various advisers having varying levels of understanding? That was the core problem.”
Better and more appealing for advisers
As Kearney began to think about the advice process and how to break it out of the silos it had developed into, he realised that what he was considering was also a potentially better and more appealing structure for the firm’s advisers.
“There’s a type of adviser for whom the silos that we present them to work in don’t suit them,” he says.
“They don’t want to be caught in that frame, either. They want to be providing holistic, more broadly considered advice, or participating in more broadly considered advice.
“And so, the magic – for want of a better word – that you seek in a commercial paradigmatic shift should be that not only is it a reimagining of what the client is seeking, but it’s a reimagining of what the practitioner is seeking, or the type of practitioner who would be suited to this type of work.”
Kearney says he was convinced that the approach he had in mind would work better for the firm’s clients, but if it didn’t work for advisers and couldn’t be implemented, it would be a futile exercise.
“Will advisers get this when you ask them to work differently and think differently and approach client situations differently; or will they think that I am bombarding them with a bunch of things they’d rather not think about?” Kearney says.
“That was the test. I believed that a type of adviser would really enjoy that. The test was actually bringing it to life, to see whether or not they’d actually bite at the processes to make this work.”
In the end, Kearney said he experienced “basically no resistance, and I would classify it as an embrace”.
“That might be a bit about our culture,” Kearney says.
“But I suspect that actually there’s just a lot of people who would like to be participating in this kind of model for the provision of advice.”
Kearney says any change naturally creates a degree of wariness, but he says it’s tapped into something that advisers have a natural affinity towards.
“If they didn’t like it, then you would be dragging [them] kicking and screaming, and you would find out,” he says. “That hasn’t been the case.”
No need to be an expert at everything
Kearney says reorganising domain experts around the client doesn’t mean each adviser suddenly needs to be an expert in all aspects of a client’s needs across their household and business, it means having specialists around the table and available to the client as needed.
“The example I’ve been going back to… is the surgery table,” Kearney says.
“I feel it’s the one place where multiple disciplines are coordinated to meet together at the same time and do the thing that each of them needs to do around a situation.
“It’s not an exact mapping of what we’re doing, and I don’t want to get what we’re doing confused with anything that’s life-saving. But it’s the one place where, to a large extent, egos are put to one side, there are roles to be performed, and in a particular moment one role is the most important, and in another moment [another] role becomes the most important, and that that moves around, serving the central objective.”
Kearney says the model is “not asking, and we never would ask, someone to do something that’s outside their domain”, but rather it requires them to co-ordinate their skills and expertise with experts in other fields around the client-focused strategy.
In other words, what Kearney believes he’s in the process of solving is “a coordination problem, not a work problem”.
Central to the approach is an administration system that enables a free flow of information between team members, which Kearney Group has developed in-house – it helps that Kearney himself has “some background in software design and I can build a model”.
It was a critical step in the transformation of the business to reorganise its resources with minimal disruption to existing client relationships.
“I figured out who the lead adviser was for every client… and maintained that relationship,” Kearney says.
“I didn’t shift that relationship and only shifted subsidiary relationships but clustered the clients together around least disturbance to the secondary relationship.
“So primary relationship unchanged; least disturbance to what I thought was the secondary relationship; and then gather the advisers around that. That was the that was the order of things. But of course, the advisers in that instance were still working with the clients they knew, so that was good.”
The bigger risk was to do nothing
Clearly, redesigning the delivery of advice around integrated advice teams was not a risk-free undertaking, but Kearney says the bigger risk was to do nothing.
“The risk was that I was mostly alive to [was] just grinding the wheels, and just doing what financial services businesses are supposed to do and trying to be – I say this in the kindest possible way – a bit like everyone else, and just following the industry,” he says.
“That’s actually the thought that horrified me. Anything else didn’t feel like I was risk-managing at all.”
Even so, Kearney describes it as “actually dangerous” to provide multiple services to the same client. If one element of the service delivery fails it has knock-on effects to all the others.
But after two years in practice, Kearney says the approach is “delivering consistently better outcomes to the client, where less stuff falls between the cracks, and the client feels more looked after”.
“And you know a bit more about ‘looked after’ in a number of ways,” he says.
“One is in terms of how clients refer, and that’s really bubbling up hard; and a second way is client issues or complaints – or ‘niggles’ as we like to call them – start to reduce [as] the stuff that falls between the cracks diminishes.
“It’s still happening, but we’re getting better and better and better at getting organised and delivering and holding each other to account.”
Kearney says there will be financial benefits for the business as the IATs continue to improve how they work. But he says there’s a logical sequence of events to follow, and the first event isn’t maximising profit.
“We’re not applying high levels of pressure to try and get incredible labour efficiency… when what we’re asking people to do is to learn to do something differently,” he says.
The aim is to first deliver advice well under the IAT structure “so they see that, before we start to understand how to also do that really profitably.”
“Do we think we’re going to get more profitable? Yes, we do,” Kearney says.
“Do we think we’re going to get more efficient? Yes, we do. Has that been the goal for the last 12, 18, 24 months? No, it hasn’t. We’ve been talking about it, without leaning on it too hard.”
The bottom line is not the driver
Kearney says the business has “quite deliberately got ourselves an infrastructure for an organisation of a particular size, [and] we’re not quite there yet”.
“Looking at the bottom line has never been the thing that is driving me – and I think we’ve had this conversation before. [It is] more about the shape, getting into the right shape, and if it’s healthy, that will look after itself at the at the right time.
“Revenue has grown 20 per cent in the past year, or something like that, purely off organic growth, which I think most organisations would accept. That’s with trying to do something complex that we could have just decided not to do, and manage all of that.”
Kearney is a believer in natural systems – a philosophy that holds that elements, boundaries and relationships exist outside of human control. He says the IAT structure presents what he describes as “a propagatable model” for delivering advice.
“Things will grow where they should grow,” he says.
“If it’s an idea that’s worthy, it’s a propagatable model that can land in other places. So those IAT pods are propagatable, and we are in conversations about the early stages of doing that.”
Kearney says a prime motivator for jettisoning the traditional mechanisms of service delivery was the opportunity to “play with the boundaries of financial advice”.
“I find that interesting and absorbing and I think people like it, or a certain type of person likes it, and there’s enough of those sorts of people around to do it,” he says.
“To extend that idea a little further, we look at organisations as having hard capsules around the edges of them; I’m much more interested in the porosity of the edges of the organisation and how it connects into other things and trying to not be fixated around the boundaries of the organisation.
“We’re getting a little bit philosophical, perhaps, but those are the things that stimulate me, and I think stimulate other people, even though it’s best to bring them to those ideas slowly rather than whack them over the head with it.”
