Institutions must embrace limited advice model

Institutions and banks are going to have to embrace limited advice networks along the lines of Colonial First State’s phone-based limited advice service if they want to hold on to their advisers’ lower end underserviced clients, according to the director of Provisio, Cameron O’Sullivan.

Most institutions were running an advice model whereby all their clients were being serviced by an adviser attached to an aligned dealer group, but some lower-end clients were not suited to that model and were in danger of leaving as a result of being unserviced, O’Sullivan said.

The institutions would have to create a new model of advice to engage those clients more regularly, he said.

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“Particularly as we start looking forward to the opt-in legislation where you’re going to have to be able to justify your service to your clients ... you’re going to need a new model to service them because if you’re not dealing with them regularly then they’re not going to sign the paper. They probably do have a financial advice need, but it’s just not suited to the model the adviser is currently using,” he said.

Those lower-end clients were probably more suited to a rapid advice call centre type of arrangement than a comprehensive advice scenario, O’Sullivan said.

Only 70 per cent of clients were currently being actively serviced by their advisers, he said.

The new model would lead to fewer clients for each adviser, he added.

Although institutions were reluctant to create other channels of advice that would compete directly with their advisers, they would have to create the new model in a way that wouldn’t cause friction with their existing advisers, O’Sullivan said.




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