Financial planners will not be able to survive in the high tech, low fee future on their own, according to Matt Lawler, general manager sales at MLC adviser serv-ices.
Financial planners will not be able to survive in the high tech, low fee future on their own, according to Matt Lawler, general manager sales at MLC adviser serv-ices.
With increasing competition from banks and easy access to financial products over the Internet, Lawler says planners will struggle to remain at the top without some sort of business alliance.
Lawler will be presenting his ideas at the Financial Planning Summit Conference in a talk entitled Business partnerships in the new Millennium.
Any small financial planning business needs a partner to provide the scale and the ability to compete with technology, Lawler says.
“Planners need investment platforms, technology platforms and enabling platforms to provide the service their clients will expect.”
He says the best way for planners to access these platforms is through a deal with a larger financial business that has spent the time and money developing sophisti-cated systems. The change, Lawler says, is inevitable and planners who ignore it do so at their peril. He cites the classic example of IBM, a company seemingly un-challenged in the computing world in the 1970s.
“IBM thought the PC wouldn’t work and that it didn’t need to do anything about it,” Lawler says. “Many financial planners are like that, they think ‘Why if I’m at the top today do I have to worry?’ But if they’re going to compete in the future they must address the issues raised by technology.”
For many this may involve a mind shift and an accurate assessment of where the financial planning business is headed.
“This industry has evolved from a cottage industry and today we are in an era of integration,” Lawler says. “Now it is a very sophisticated industry and large tech-nology platforms are needed.”
He says the pace of technological change is forcing planners to define their role more precisely.
“Planners spend the biggest part of their time putting together an investment plan; doing the research, implementing it and reviewing it,” Lawler says, “In the future this will be quick and cheap.”
With a large part of their work done almost automatically financial planners will have to explain to their clients exactly what they can offer them.
“Clients will no longer go to advisers who will just access and pick managers. Af-ter all, you can buy the Australian Financial Review for $1.50 and look up the Morningstar figures and do that yourself,” Lawler says.
Planners, he says, will have to act more as the financial ‘coach’ taking clients through each step of the process.
“Financial planning is not just about stock picking and choosing managers. It’s also about guiding clients and disciplining them through the process. That can’t be re-placed by technology.”
However, while planners may have to work harder to convince clients that their services are worthwhile, they will still have to provide cheap and fast access to in-vestments. And, if Lawler is correct, the only way to do this is through a business partnership.
“A lot of planners look for a partner who they think will build or already have the final technological answer. But there is never a final answer, the technology is al-ways changing. You should not just choose partners who offer you the technology of today but those who are on top of the technology of the future.”
