Advisers may not be inclined to improve productivity to take on more clients if they are making the same amount of money with a smaller client base, despite the growing demand of financial advice.
Instead of finding long-term solutions to bring down costs to serve and allow access to many more Australians, advisers can increase their fees, save time on paperwork and pay greater attention to a smaller client base.
Speaking at a roundtable hosted by Professional Planner, held in partnership with HUB24, InvestBlue CEO David Stephen said the advice profession has an obligation – or moral case – to boost productivity.
“Productivity is not just about the success of our business,” Stephen said. “It’s about the success of all of us as a profession.”
If the financial advice industry improves productivity, advisers will be able to provide services to more people in need of advice who cannot currently afford it – hence the potentially ethical obligation.
Stephen said that advice members are “continually shifting and shifting up the scale” and consequently “leaving more people behind”.
Before delivering the first draft of Delivering Better Financial Outcomes legislation late last year, Minister for Financial Services Stephen Jones said his intent to reform advice laws was driven by feedback from advisers who assured him they’d see more clients if red tape was reduced.
But whether there is a moral duty for advice firms to boost productivity to bring costs down and serve more clients is a grey area as advisers should have the prerogative to take on as many clients as they wish, and some may not want more.
Profile Financial Services chief executive Lena Ridley said many advisers are “happy not being more productive” – a controversial perspective as other speakers asserted productivity was at the forefront of most advisers’ minds.
Entireti chief executive Neil Younger said that advisers who have a significantly reduced client base do so because they prefer to spend less time on administrative tasks.
“Economically, if you’re not motivated to make more money, you make the same money with half as many clients, it seems like a good trade off,” Younger said.
If advisers can spend less time on unnecessary tasks as part of the process and more time on delivering advice, that is “exciting”. “They don’t really want to change from that,” Younger said.
Although Younger agreed advisers would feel like they’re taking less risk by working with a smaller client base, Rhombus Advisory CEO Darren Whereat disagreed with this notion and said the risk lays with the licensee.
“For us, it’s about controlled expansion in terms of understanding your risk tolerance,” Whereat said.
Whereat said the advisers who are happy with the current state of productivity are a minority. Most advice firms are focused on growth and therefore want to improve productivity.
“I think the demand is there and the appetite would be there for them to service those individuals,” Whereat said.
“There are certainly a proportion of businesses like that, but I think they’re in the minority today.”
Whereat suggested that if margins were improved, then adviser fees could come down and as a result advisers could serve twice as many clients.
HUB24 chief executive Andrew Alcock said even if advice firms aren’t enticed by making large-scale changes to expand advice access there is still the option of incremental progress.
“If we’re saying let’s not find incremental outcomes, what is the option?” Alcock asked.
“I don’t think we think about this as an industry or as a nation in this particular way. We deal with problems, we don’t set goals. We don’t change the outcome, we’re not mobilising towards purpose.”
Pitcher Partners financial adviser Jordan Kennedy said that if advice firms work on their productivity, advisers will naturally be more inclined to take on more clients.
“If you create the bandwidth by being more productive, you then create the headspace until I actually can see my clients because I’ve got more time,” Kennedy said.
However, Kennedy believes most practicing advisers are “looking to charge a premium” because they are already full.
A special report on productivity, featuring more highlights of the roundtable, will be published in an upcoming edition of Professional Planner.
In light of the discussion on boosting advice productivity, it’s clear that financial planners can significantly benefit from streamlining their operations. By developing well-structured business systems, advisers can reduce inefficiencies and spend more time focusing on delivering quality advice. This not only enhances client outcomes but also creates the capacity to take on additional clients without increasing fees or sacrificing service standards. Implementing these improvements allows advisers to scale their practices sustainably, freeing up valuable time for growth while maintaining a personalised approach to client care. It’s not difficult to create a ‘system’, and many planners are halfway there, but given that McDonald’s has teenagers making millions for franchisee owners and shareholders, its worth the effort to construct the pathway (system) for your staff to follow.