As Australia’s population continues to get older, so will its financial needs change and evolve. Herein lies the dual edged sword of opportunity and threat for most financial planning businesses. Consider the following key findings from the latest Business Health database:
The clients
- 53 per cent are 60 years of age or older
- Almost 50 per cent are already retired
- 40 per cent have been with their adviser for seven years or more.
So, we’re looking at a lot of clients whose current needs differ considerably from when they first became clients. Protection and accumulation plans are perhaps not as relevant as they were five or 10 years ago. They have been surpassed by more relevant – and for some, more pressing – needs, such as estate planning, aged care, charitable gifting, ethical investing as well as annuities.
There’s nothing too surprising here, I know. But as an advice profession, how are we reacting to these clients’ changing needs? An analysis of Business Health’s consolidated database would suggest there is still a long way to go for many.
How advisers are reacting
When asked about the range of services currently offered by their adviser, clients rate this as third lowest, according to our CATScan diagnostic, which measures nine key performance indicators.
Highlighting the opportunity estate planning presents, our data shows 34 per cent of clients don’t have a will. Among those clients that do have a will, 66 per cent have not had it reviewed for at least two years. This is quite surprising, given this is a service offered by most advisers.
The level of clients’ estate planning preparedness is a most disappointing 42 per cent, as shown by the consolidated results of more than 1,000 clients who have used our Estate Planner tool (provided by their adviser) in the past 18 months. Less than half of those clients with superannuation have a binding nomination in place.
Demonstrating the widespread lack of understanding among advisers about their value to clients, 38 per cent have not yet developed a clearly articulated client value proposition for their business. They are also not engaging in two-way communication with clients, with only three in 10 having sought feedback from their very best clients in the past two years.
It seems to us that the challenge for advisers is to now review current range of services they provide, in the context of their own client base.
Six steps to leverage your greying client base
1. Analyse your client data in terms of age, occupation status, services/products they currently have in place and their broader range of interests (family, community et cetera).
2. Ensure you have a system in place that maintains the currency and relevancy of this data.
3. Review the feedback from your last client survey. If it was conducted more than two years ago, do another one…now!
4. Review and compare your current service range to what you learn from the first three points above. Consider using an external, impartial associate to facilitate this exercise.
5. Move to address any gaps uncovered by point four. Options will range from developing your own capability to outsourcing.
6. If you are not confident that your client value proposition accurately reflects what you do/should be doing for your clients, change it. Once satisfied, ensure it is reinforced at every opportunity, such as through your client newsletters, website or events.
