With regulatory changes via the Delivering Better Financial Outcomes bill up in the air, day-to-day changes in the way advisers run their practices can still make a difference in lowering the cost of doing business.
The DBFO bill currently sits in Parliament and has drawn scrutiny from the advice sector over beliefs it will do little to reduce red tape and lower the cost of advice, which was the intended purpose of the Quality of Advice Review that formed the basis of the legislation.
While offshoring some of the systems and procedures has become mainstream these days, advisers like Ben Waite of Salt Financial Group admits he’s always looking for ways to outsource advice creation and explore ways for artificial intelligence or third parties such as fund managers to lower the expected workload.
“We used ideas such as offering flexible pricing structures and conducting group workshops and seminars to spread potential cost across groups,” Waite says.
“Any savings in time or excluding areas of advice that are not fully required by the potential clients’ objectives can hopefully be left for another time or directed to other educational sources that can be accessed for a lower fee.”
Arch Capital founder Nigel Baker says the firm has created a blueprint for all processes to ensure it is as efficient as possible and ensures they are documented, and that staff know the exact processes to follow.
“Along with that, we have looked for world class client engagement systems and client relationship tools, and a way to provide lower touch clients with a digital experience that has also reduced the cost to serve these clients,” Baker says.
Technology holds the key to being able to deliver advice for less, and Sam Ryma of Forest Wealth says it has scrutinised each advice situation with the intention of using a Record of Advice where possible.
“This includes using a platform-based ROA functionality, which provides straight through processing,” Ryma says.
“We are also in the process of building our internal SMA [Separately Managed Account] capability which will further lower our cost to service and free up resources to service our clients.”
While he admits it’s not earth shattering, Matt Hale of Rising Tide Financial admits his licensee has provided some relief on the compliance front, while insurers have also been taking more proactive action to get policies in place. For example, insurance underwriters are calling clients directly to get answers during the underwriting process.
He admits that taking this burden off his firm has gone some way to reducing costs.
“For Rising Tide, it’s not just about reducing the cost to serve, we’re also looking to partner with providers that will assist in our quest to get things done faster,” Hale says.
“Client satisfaction has a high correlation with our ability to get things done in a timely manner, which flows onto value perception.”
Conducted in 2022, the Quality of Advice Review’s purpose was to improve accessibility and affordability of financial advice.
The government made the final report public in February 2022, and delivered its formal response a year ago.
In November, Jones announced the first tranche of legislation saying it was up to the advice community to take advantage of the changes to help lower the cost of advice.
The red tape reduction part of the review that was meant to lower the cost of advice were meant to be the “quick wins” touted by Jones, while the more complex changes – notably the expansion of the provision of financial advice by super funds, insurers and banks – had been more controversial.
However, a convoluted drafting process so far, along with delays in seeing any legislation around Statements of Advice and the removal of the Safe Harbour Steps yet to be introduced.
