The unique challenges of being a regional financial planner

Regional financial planners face the same broad issues as those in metropolitan areas, but they also face a number of issues that city slickers do not.

In May this year, Midwinter was asked to present technical sessions for the FPA Regional Chapter Development Days in Dubbo and Orange, NSW.

Having spent my early years growing up in Bingara (northern NSW), I was keen to get a bit of insight into financial planning in regional areas.

I wanted to know what characterised financial planners from regional towns, and what issues they faced relative to their city cousins.

On arrival in Dubbo I breathed in that fresh country air and found I got the answers to my questions quicker than expected.

In the backroom of the Cascades Motor Inn, passionate debates regarding the latest issues facing all financial advisers were taking place: fees versus commissions, appropriate gearing levels in the wake of the Storm Financial debacle, the negative perception of financial advice created by industry funds and the FPA’s response to a range of parliamentary investigations at that time.

Spending a couple of days with regional planners in Dubbo and Orange, it became very clear to me that not only do regional planners face the same broad issues as those in metropolitan areas, they also face a number of issues that city slickers do not (or at least not to the same extent).

These include the necessity for more diverse planning, reduced training and professional development opportunities, difficulty in finding and keeping quality staff, a lack of business succession options, higher involvement in the community, and greater reputational interdependence.

While those in the city and metropolitan areas are able to specialise in areas like retirement planning or risk insurance, financial planners in regional areas cannot afford to be specialists — the client base does not exist.

As a result, regional financial planners are forced to be generalists; their advice must cover a more diverse range of financial planning capabilities.

Distance prevents many regional planners from accessing the training and development opportunities that are often taken for granted by those who dwell in city areas.

As a result, when these opportunities do arise, regional planners tend to take full advantage of them.

It would appear that financial services providers are missing out on an opportunity to get in front of an enthusiastic and hungry audience. No-one sleeps in these sessions!

Graduates from regional areas tend to be blinded by the potential opportunity afforded by the big city. It is therefore not only difficult to find appropriately educated or experienced staff, it is also difficult to keep them.

While the cost of staff in regional financial planning practices is less than that in metropolitan areas, it is this cost differential that creates the staff shortage in the first place.

With only a small number of financial planning practices in regional areas, establishing a business succession plan that enables existing clients to be serviced following a financial planner’s retirement (or other early exit) is extremely difficult.

In regional and country towns everyone knows everyone. In order to build their businesses in regional areas, financial planners need to have strong community involvement, either directly or indirectly via sponsorship, for example.

There is also a greater emphasis on relationships. This is highlighted in the level of pro bono advice provided by the average regional adviser, who often undertakes it because they are a close relation of an existing client.

When a financial planner in a regional area fails, other financial planners in the area are also tarred with the same brush. Irrespective of dealer group, allegiance or association.

As a result, financial planners in regional areas are far more collegiate than those in city or metropolitan areas.

This was apparent in my first experience with the Dubbo and Orange FPA Regional Development Chapters, where issues and ideas were thrashed out for the greater good of the planners in the region.

Despite the additional challenges they face, there remains a determination by financial planners in regional areas to provide the highest quality advice.

This is demonstrated by regional financial planners like Peter Roan from Roan Financial Services, based in Orange, who recently received Money Management’s Financial Planner of the Year award. It is also a key reason why we again supported the FPA Regional Chapter events in September and will do so again for future events.

Matthew Esler is general manager — strategy and technical, Midwinter Financial Services.