If you read the latest Deloitte report suggesting the future of the advice industry is bright, I would undoubtedly agree but say that it is actually - blinding. To me it’s absolutely obvious that the industry has a huge future and not disrespecting what a wonderful report it was, we did not need it to believe that "we are going to be ok".
We solve genuine problems through education, specialist knowledge and careful trusted recommendations that help families manage their inbuilt behavioural preferences. We are on hand to block out all the horrible noise, confusing marketing and help them come to right decision that suits them.
It’s no question that we guide our clients to better decisions that have huge impacts on their end game and that we have access to solutions that suit their ever growing needs for financial success through simplifying their financial life.
I have no doubt that our industry will become smarter, more efficient and lose the fat. But as the superannuation industry quadruples, 10 million more people arrive and every Australian is forced to be their own financial adviser, the growing need for trusted advice will explode.
At the moment, Australians do not trust advisers. Hey, I don’t trust most of them, but that is not saying it will always be this way. We will win this battle, bit by bit, day by day and I see a day where everyone will have access and be associated with an independent financial planner in some form. Most likely through a digital platform, whether in an online study group like environment or a personal face-to-face (maybe online) interaction.
Why do I believe this?
There is a movement or revolution you might call it by young financial planners all over the country. Coincidently, it’s the same “young ones” who apparently do not know a thing about good strategic financial advice. As I have been told numerous times before we should stop trying to put our clients first and follow the older advice processes of the past.
As suggested in the Deloitte report, the future of advice is not the past. This movement has been happening for some time now but like all movements is beginning to snowball down the mountain.
The young and tech savvy advisers who would likely have been in some form of schooling only 5 to 15 years ago are asking more from the industry and setting up a whole new advice framework built around transparency, partnership and trust.
They are finding clients are becoming more and more knowledgeable and attracted to their all inclusive but individually tailored service. The independence from product and strategic approach that is focused on helping them achieve their dreams regardless of what the advice might be is something clients are wanting.
Clients are looking for a long-term partner and want to be part of a business that undoubtedly puts their needs first. The advisers at these businesses have diaries booked months in advance and are growing at what would be considered a slow to most service businesses rate. By taking on just a handful of new clients a month, they are growing at a steady sustainable rate and almost exclusively through client referrals.
It all sounds great but the problem all these firms are having however is that they are struggling to grow faster as they do not have the teams behind them to back it up. There are only a limited number of hours in a day, numbers of meetings they can run and clients they can delight.
As the demand becomes greater every day and year, if you speak to the owners they all worried that the talent pool is already incredibly small and there are not going to be enough young advisers coming in to the industry.
Without speaking for everyone, all the firms I know would hire top talent without question if it knocked on their door. They are needing help but they are finding it impeccably hard to hire top talent.
I think we need to firstly question - why would young professionals want to enter the financial planning industry?
They might not even know it’s a job firstly as historically it's not really mentioned through schooling. Secondly if they do, they know that financial planners are hated by society and frowned upon everywhere they go. It’s not a nice statement, but it is the truth.
For the ones that do enter, they are not dumb. They know how to find a job, are not worried in the slightest about getting a job and will only accept working for a firm that is aligned to their values. They want to be part of a firm that is forward thinking, flexible, ethical, technologically leading and one that they can build their own business within one day.
All young advisers understand that to earn a top income long term, they must build their own client base. A client based that is very loyal, loved, delighted and enjoy the day to day relationship as much as they do.
The good news is the relationship building part is not as difficult as it sounds. To grow a client base year in, year out all you need to do is to stick to the principles of good service. Doing right by your clients, making sure you continue to live up to expectations and grow at a sustainable rate as to not fundamentally not piss them off.
If I was to summarise what worries me however, is the need for financial advice is about to explode and when it does I fear that there will not be enough talented advisers to do the work required.
If we have an average adviser age of around 55 and therefore we have a lot of advisers leaving the industry just as the need for advice increases.
We will need to find a way to service a lot more clients in a much more efficient way.
To make this matter worse, we are also heavily male dominated. I argue that it should be the opposite. Females as a whole will be and are better advisers than men.
So moving on, I think identifying and building a better industry (perhaps even turning it into a trusted profession) may attract better quality talent to come in to the financial services world. In turn we can help the millions of Australian families that would benefit from some independent and sound financial advice.
If you can’t tell, I am excited about the future of advice in Australia. We are moving to a behavioural and relationship model, where our role is to maintain a relationship based on helping our clients achieve outcomes. Fundamentally, our clients will pay us for that and nothing more, nothing less. The investment nonsense is going and clients will be asking two questions, is there anything I can do to improve my situation and what do I need to do this year to stay on track.
To be blunt, I am not worried in the slightest about robo-advice, in fact I love it. Do I care that commissions are going, no. Do I believe technology will take over a lot of what we do – I bloody well hope so.