In one of those delightful chance happenings, I ran into Greg Bright on Bligh Street in early 2007, having not seen him for the best part of a decade.
He had just launched Professional Planner. And I had just co-launched a consulting fee advisory firm. Both of us were energised by the prospect of entering uncharted territory.
And such uncharted territory it turned out to be. I doubt that either of us understood the change that we were to be part of – and contribute to – over the following 10 years.
Looking back, much has changed in the last 10 years and there are many more changes to come. But there are also certain constants.
In hindsight, the breadth of the changes in financial advice in the last 10 years has been amazing. The single most dramatic shift, I believe, is clients’ appetite for fee for advice.
In 2007, when we launched, we identified a segment of potential clients seeking professional, fee-based advice. When we asked about their current advisory arrangements, that’s what they told us – that avoiding commissions and paying fees was at the top of their wish list.
The problem was, despite their intentions, in practice they weren’t ready to change. It seemed that while there was some desire, it was too early for the market to move. Building a professional business was hard, really hard.
The turning point, ironically, was the financial crisis in September 2008. The market fallout put fees on the front page of the paper. And clients, having seen their asset values perhaps halved, seemed to develop a greater respect for risk, an appreciation of professional (versus product) advice, and a realisation that ‘free’ advice was not so free.
While I’m not suggesting that clients suddenly liked paying fees, it did seem that they liked knowing what fees they were paying. Fee-for-advice shifted from being an impediment to an advantage.
What will change in the next 10 years?
Without a doubt, we will face demographic, regulatory and technological changes in the next 10 years – with the most exciting and challenging being technological.
Now I’m not good at forecasting, but if I had to pick one inflection point, I expect to see a transformation of technology at the client front end. I think we will see increasing demands from investors regarding how they access investment products and engage with financial strategy and advice.
What’s not going to change?
I believe that, as advisers, we can benefit from focusing less on what may (or may not) change, and instead building our value proposition around the things that are constant through time.
We know that our clients have complex financial lives – and that they need help to make the most of the opportunities and challenges that this brings. That will still be true 10 years from now.
We know that regulations will continue to adapt – and that our clients will want to understand how to meet new requirements and make the most of the changes. That will still be true in 10 years.
We know that investments will enjoy and endure market cycles – and that our clients will need help to navigate those ups and downs. I can’t imagine a future when this is not true.
As advisers, if we focus on these things today, they will still be paying dividends for our clients 10 years from now. There’s no chance that people will stop caring about them in the future.
Kate McCallum is the director of Multiforte Financial Services.