Demand for one-off advice drives new opportunities for advisers
A growing demand for one-off advice among clients is bringing more opportunities to advisers wanting to build and expand their secondary client base given that the cost of advice delivery has grown significantly over the last few years as the number of advisers per clients per adviser is decreasing.
According to Angus Woods, founder and executive director at Adviser Ratings, around 15% of advisers declared they would want to leave the industry, as a result of being overwhelmed by the Financial Adviser Standards and Ethics Authority (FASEA) exams and ongoing requirements, while at the same time the demand for advice remained strong across all age groups.
“The last 12 months we have seen an influx of consumers wanting advice but unfortunately advisers sitting on the sidelines cannot deliver it at the moment, because of the cost of that advice,” he said during a webinar with Vanguard on Wednesday.
He said that advisers were concentrating more on wholesale and sophisticated clients and spending more time on complex arrangements which meant they had no time left nor the inclination to look after those perceived as low value clients.
“I think we are going to start to see that shift from the holistic [advice], and that always is going to be important, but more into that one-off advice type of advice arrangement. With that one-off advice people are looking to see what the advice can do for them before they become the holistic client,” Woods said.
The research also confirmed a drop of about 10% in the holistic advice segment over the last 12 months.
Libby Walsh, Vanguard’s practice development manager, said that fewer clients per adviser trend was also driven by the switch-off of the grandfathered commissions last year but, at the same time, the proportion of clients looking for one-off or ‘situational’ advice went up by 20%, creating the new pool of potential full-time clients for advisers.
“The opportunity for the advisers is really to focus on growing their client base. And potentially you can consider growing a secondary client base looking at those clients who do require situational advice or on-off advice and building that as a secondary client base to potentially full service clients,” she said.
By doing so, advisers could also, according to Newman, help to change their client demographics base by reducing the average age of a client and diversify their revenue lines.
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