Colonial steps beyond holistic advice model

Colonial First State-owned advice business Financial Wisdom is positioning to meet a growing demand for limited advice.

Financial Wisdom has employed a team of phone-based advisers who are working with Financial Wisdom practices to maintain contact with clients — particularly those in the ‘long tail’ of the business — and resolve simple advice requirements.

Discussing the new service, Colonial First State Advice Business general manager Paul Barrett acknowledged that holistic advice is not necessarily the ideal model for the financial planning industry.

"At times we rush to provide fully holistic advice to every client who walks in the door, and often clients don’t want or need that," he said. "Obviously providing holistic advice when a client’s needs are simple is going to incur additional costs and slow things down."

Industry superannuation funds are gaining traction with segregated advice offerings, which escalate clients from simple to comprehensive advice as required. Financial Wisdom’s new service represents a reverse implementation of that model, which allows advisers who traditionally offer holistic advice to ensure that less demanding clients are not forgotten. This is particularly important in an environment where trail commissions are no longer guaranteed when there is no service attached.

Barrett said there are currently five phone-based advisers supporting 10 Financial Wisdom practices, but the group is looking to grow that number. The supporting advisers speak to clients of the practice, fulfil simple advice requirements where appropriate and refer the client back to the practice where more in-depth advice is required.

Barrett said the supporting advisers are taught about the systems and value propositions of the advice business, and that the practice indicates which clients should be contacted. Practices pay a flat fee to access the service as well as a fee based on the number of calls made by the supporting adviser.

"Cross-subsidisation of the advice process, while it has been a feature in the past, is going to become less of a feature in the future with these sorts of models because people will pay for the services they consume," he said.