Days after US President Donald Trump announced sweeping tariffs as part of his so-called “Liberation Day”, which sent global markets into meltdown, the Australian Liberal Party issued a media statement describing Australians as “dangerously unprepared” to understand and ride out economic shocks due to their inability to access advice.
Between 2 April and 9 April, more than US$10 trillion ($15.6 trillion) was wiped from global equity markets, as fears of trade wars and a global recession took hold.
Investors watched as their superannuation and pension account balances plunged.
While markets have largely recovered, with Trump walking back some of his decisions, heightened economic uncertainty and volatility is here to stay.
It’s times like this that the value of advice comes to the fore.
As part of the Liberal party’s election campaign, it vowed to make advice accessible and affordable to more Australians by reducing red tape and compliance costs, and doubling the number of advisers to 30,000, if it won power.
Of course, Labor won the 3 May election in a landslide victory and now has the opportunity to continue its path to advice reform.
Fitzpatricks Group is highly supportive of reforms designed to improve access to quality advice, boost adviser numbers, and underpin a thriving advice profession.
There is no question that rebuilding the industry requires supportive government and sensible public policy but every participant has a role to play.
Advisers and their business partners must do more to drive process improvements and efficiencies; attract, develop and mentor talent; and expand their capacity to help more people.
Looking at that to-do list, it is increasingly clear that large, national advice firms will play a central role in this rebuild, alongside independent financial advisers (IFAs) and boutiques.
As a relatively young industry, advice is still dominated by thousands of small businesses including many sole practitioners.
There is nothing wrong with small businesses. They are the engine of Australia’s economy, representing around 97 per cent of all Australian businesses and employing over 5.1 million people.
But if the industry hopes to replenish adviser numbers and reach millions more Australians any time soon, it needs businesses with a clear vision and strategy to train and develop advisers, and efficiently deliver consistent, quality advice at scale.
What is a national advice firm?
A national advice firm is so much more than just a business with offices around the country.
In a national firm, offices – or principal practices – are united by a common vision, business model and brand.
They share the same corporate values and advice philosophy, they understand the type of client that they’re trying to help, and they adopt the same systems, processes and governance to deliver a consistent client experience.
Advisers abide by guiding principles around the delivery of advice, service standards, and pricing, which creates parameters in which they can operate freely and confidently.
At its core, a national firm is a group of business leaders and financial advisers who are in total agreement and alignment on how things should be done and why. They are committed to each other and their clients, which builds a strong, collaborative and respectful culture.
This is different to the traditional licensee model, where a disparate group of individual practices with their own brand, beliefs, client segments, and processes are thrust together.
In that model, the group is only as strong as its weakest link.
But in a national firm, there is no lowest common denominator. Principal practices are handpicked and their inclusion is strategic and deliberate.
In addition to the minimum education, training and professional standards set by the industry, they must also adhere to the proprietary rules and expectations set by their firm.
This creates alignment on critical areas like advice and investment philosophy, ideal client, and risk and compliance.
It is much easier to scale a business that has a single, universal approach. A singular approach is also critical for addressing advice variance, an issue that practices and the broader industry have grappled with forever.
It’s still possible that an individual can seek advice from five different advisers on the same matter and walk away with five different approaches.
Yet, in other professions, for example, accounting or engineering, clients are highly likely to receive the same or comparable advice.
National firms are strongly positioned to reduce variance and deliver consistent outcomes, whilst also recognising that advisers need to bring their unique personalities and skills to the client engagement experience.
However, there are only a small number and many more needed.
Solving the demand and supply imbalance in advice, and securing the industry’s ongoing growth and success will require a multi-faceted, multi-pronged approach and buy-in from every industry participant.
With global economic and geopolitical uncertainty here to stay, and millions of Australians charging towards retirement, the industry must encourage and accelerate the development of national firms, alongside of smaller IFAs and large dealer models that can deliver advice at scale and raise up the next generation of advisers.
Andrew Fairweather is chief executive of Fitzpatricks Group.
