Fortune will favour those
boldly embracing the new landscape
As we commence a New Year, forward-thinking financial planners have five good reasons to feel confident about the year ahead and their future more generally.
With all that’s been said and written about the Royal Commission and the incoming round of changes in financial services it would be all too easy to become pessimistic about being a financial planner. However, for those willing to take an entrepreneurial and long term perspective, the future could not be more positive.
Here are five reasons why financial planners should be confident about what lies ahead and certainly these areas will warrant attention as the year unfolds.
- Your clients love you
In the wake of the Royal Commission, it is understandable that the members of the general public have heightened concerns about the safety of their investments.
Yet for all the reasons why the revelations from the Royal Commission might have “startled the horses”, there is encouraging research to show that most clients retain confidence in the adviser they use.
Going into the New Year, you have the means to build this confidence even further. For example, your regular newsletter could be expanded to talk about new initiatives you’re putting in place to improve service levels. Certainly, you should let clients know that you are undertaking additional qualifications, which will help you to provide them with high quality advice.
- Reduced competition
There’s little doubt that there will be greatly reduced competition in the future. Leaving aside some spectacularly dramatic exits from the industry brought on by the Royal Commission, the new education standards will herald a significant exodus from the ranks of senior advisers. Expect this to happen in two waves, triggered by the upcoming FASEA exam for existing advisers by 2021 and the financial qualifications which will need to be completed by 2024, along with all planned retirements any time between these events.
Those same standards will also make it much more difficult to enter the profession. Happily, there will be no more of those “I got a financial planning license in two weeks” articles that journalists have trotted out over the years. Keep in mind that the same population of people needing and seeking advice will soon have much fewer advisers to choose from.
- Your time has come for accounting alliances
As an unexpected positive for planners, it appears that FASEA is going to do what FOFA promised but didn’t deliver on curtailing the involvement of accountants in financial services.
It’s highly unlikely that many previously licensed accountants will be able to justify investing the time and attention required to obtain the further qualifications required to continue advising clients in financial service matters.
Already we are seeing accountants exiting the licensing arena and instigating JV talks with financial planners. In the past, accountants taking this step have been the exception. Now though, there are signs that this is going to become much more commonplace.
- A new era for licensing
Whilst we must await the legislation that will inevitably follow the outcomes of the Royal Commission, it’s clear some positive changes are afoot.
Quality advisers in large, traditional licensees have for far too long suffered under compliance requirements imposed to cater for the least capable performers, rather than foster those aspiring for excellence. If in fact licensees survive the mooted changes, it’s likely we’ll see less of the “one size fits all” licensee service offering.
Already, we’re starting to see nimble competitors emerge with quite tailorable options. Whilst still being able to take advantage of collective buying power for their staple requirements, astute advisers will increasingly be able to mix and match licensee offerings with services provided by complementary external providers.
As an extension, we’re starting to see growing numbers of forward thinking advisers band together in small collectives under an independent license. Under the backdrop of the Royal Commission, it’s certainly a great environment to be demonstrably removed from the undue influence of product providers.
- An exciting new landscape
Out with the old. It’s much less likely that your competitors in the new environment will be subsidised, incentivised and otherwise advantaged. So too, there’ll be far less noise from telephone sales and over the counter selling at bank branches
Previously, the most likely “silver bullet” for financial advisers wishing to improve their business was changing licensees. Too often however this has proved to be a “blunt instrument”, involving such a significant compliance burden in changing over that the original reasons for the switch are all but lost. A feature too of the old model has been licensees’ focus on gross revenue, which does not necessarily align with the bottom line aspirations for their advisers.
In with the new. In the new era expect to see much greater transparency throughout the industry regarding fees, meaning that you will be able to compete much more on your merits.
Rather than changing licensees, we’re seeing some spectacular results from advisers who have rationalised their client list and undergone significant fee upgrades for those clients remaining. It’s remarkable how this empowers firms to not just lift the quality of service to current clients but to proactively foster referrals from them.
We’re also finding that the advisers we work with appreciate being able to work with an independent coach, as opposed to a BDM whose agenda is dictated by their licensee. Further, regular accountability sessions with hand-picked peers are proving to be far more conducive to improving results than the typical peer exchanges which occur at annual conferences.
The future is not for the resisting, resentful or reluctant. Rather it will belong to those who willingly embrace the current round of changes. As the number of present competitors reduces and the barriers to entry increase, progressive financial advisers have plenty to look forward to in 2019 and beyond.
Scott Charlton is a director of Slipstream Coaching, a company dedicated to assisting financial practitioners achieve their potential. A long term business coach to both accountants and financial planners, Scott is also the author of three books regarding professionals in practice. Scott can be contacted by phone 07 3221 3796 or via email firstname.lastname@example.org