Just as the successful advice business of the future will look very different to the typical business of today, the successful licensee (dealer) group of the future will bear no resemblance to the typical dealer group we now know.
A number of unstoppable forces have already begun to change the whole structure and economics of an advice business and will continue to do so over the next three years.
The advice business changes that have been a result of these forces (see sidebar to right) have repositioned the priority support the business owner is seeking.
Where those owners access their current support services from their dealer group, they will be demanding new services from that dealer or will look for this support from alternate suppliers — either other dealer groups who are providing such support or other service providers.
As a result, the dealer group must develop new capabilities if their service offer is to attract and retain quality advice business clients, just as the advice business has had to build new capabilities to satisfy the needs of its advice-seeking clients.
Currently, most dealer groups have similar offerings, although the quality and depth of service delivered varies greatly.
Most dealer group offerings today are dominated by what have become ‘commodity’ services: research; software; commission processing; technical support; training and professional development; and compliance and paraplanning services.
The dealer group offer is often complemented with the inclusion of ‘additional’ services, such as marketing, business development and business succession services.
While most dealer groups have the capability to deliver the ‘commoditised’ service components, very few have the capability to deliver value in ‘additional’ services.
What support services does the advice business value?
Before examining the capabilities and offer to advice businesses that the successful dealer group will have over the next three years, let’s examine the support services that an advice business really values.
Business owners do not value what the dealer group does; they value how they are better off from what the dealer group does. They value the outcomes they experience from the services the dealer group provides.
These outcomes include:
- the growth of the business — successful advice businesses over the next three years will have gained critical mass to gain economies of scale. This critical mass will enable the business to have additional capabilities, which in turn will enable further growth and value delivery to clients. It will also contribute to greater rewards for business owners;
- additional capacity through increased efficiency — to overcome the rising costs of operating an advice business, business owners will be looking to gain increased capacity without increasing the number of people employed. This increased capacity will normally be gained by higher levels of efficiency through the more effective use of technology and the more disciplined implementation of advice and service preparation and delivery processes;
- attraction and retention of talented people — there is as much aggressive competition for talented employees as there is for new clients. A talented employee group is the primary driver of business growth. Without this talent, businesses will not be able to achieve exponential growth objectives;
- development of knowledge, skills and competencies of all people in the business — talented people need the opportunity to learn and develop, and business owners will need external support to deliver stimulating learning and development programs for their employees;
- value delivery to their clients through the appropriate advice — as clients are becoming more demanding and sophisticated, it is even more important to increase the level of value delivered to them. Often this increased value will be delivered through additional components of advice for which the traditional financial planning business has previously not been accountable; and
- effective risk management — managing all business risk, not just the business activity that is identified as a risk to the dealer group, is critical to successful advice businesses. However, the capability to do so effectively may require accessing external resources.
The capabilities of the successful dealer group of the future
To deliver these outcomes, the dealer group will have to broaden its support services and build its capabilities. The existing ‘commodity’ support services will still be required, and will continue to be important, but new capabilities will be required to deliver these outcomes. These new dealer group capabilities will include the following.
Marketing and new client generation
Although ‘marketing support’ is included in the offering of most dealer groups this support rarely delivers large numbers of new clients to the advice business. The current marketing support offered by the traditional dealer group is often limited to advice on marketing activity from a business development manager or access to some template materials or group collateral.
The successful dealer group of the future will provide access to marketing professionals who will support the advice business in the areas of branding, developing a practical marketing plan, designing an irresistible offer for the target markets, designing presentations and effective strategies for forming alliances with other professionals and presenting development programs for the marketing team of the advice business.
The success of this support will be measured only by the number of new potential clients introduced to the advice business.
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ficiency design and management
Support in the area of technology will not be limited to the proprietary software of the licensee, but will be extended to cover broad business technology and automation support. The successful dealer group of the future will employ efficiency specialists with an intimate knowledge of technology and how technology can be utilised to deliver significant efficiency gains without compromising the desired client experience.
Efficiency specialists will also have expertise in process design and implementation and will be available for specific project work for the advice business. The success of this support will be measured only by capacity improvement in the advice business.
Human capital recruitment, development and retention
New capabilities in human capital support will be a part of the offer of the successful dealer group of the future. This capability will include professional talent search, selection and recruitment services, the design and implementation of motivating remuneration and performance management structures and support in managing career progression, skill and knowledge development and resource allocation. The success of this support will be measured only by employee retention and satisfaction indices.
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ulti-dimensional advice delivery
Building this capability will require making available non-traditional advice specialists to deliver advice as it becomes a priority to the advice business clients.
Specialist advice such as business strategy and structures, estate planning, property acquisition and sales, philanthropy and aged care will be provided by the successful dealer group of the future. The success of this support will be measured only by client satisfaction and attraction and retention indices.
Strategic business advice and consulting
Capabilities in strategic planning, mergers and acquisitions and succession planning will be required to satisfy support demanded by successful and growing advice businesses. Specialist business consulting capabilities will reside in the successful dealer group of the future and be available to the advice business to design and implement future growth strategies, succession plans and to manage mergers or acquisitions. The success of this support will be measured only by business growth.
The offer of the successful dealer group of the future
Once these capabilities are built, the successful dealer group of the future will be able to deliver on an offer that will attract, deliver value to, and retain quality advice businesses within their networks.
Just like advice-seeking clients of advice businesses, the owners of these businesses are becoming more demanding and selective in the support providers they partner with. They will no longer accept nor respond to an offer that does not help achieve what is important to them. The successful dealer group of the future will realise this and build new capabilities to ensure they attract and retain quality advice businesses in their networks.
David Fox is principal of Advice Centre Consulting.
