The three themes shaping modern advisory firms in 2023

Advisory firms that will witness success in the next few years are the ones able to evolve their business model to capture opportunities arising from regulatory change and team up with the right business partners, according to research.

They would also be able to promote the benefits of a career in financial planning and attract talent, based on a new paper Advice trends and opportunities: 2023 and beyond released by Desktop Broker, the wealth management arm of Bell Direct.

“There is so much opportunity for advisers to grow their business but there are three fundamental building blocks that must be in place first to ensure a rock solid foundation,” said Arnie Selvarajah, Bell Direct chief executive. 

“The right people and culture is key but there is a war for talent going on right now so advisers need to sell a career in advice and get creative about the benefits and flexibility they offer. 

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“Even then, every business has finite resources so they need to leverage the capabilities and expertise of trusted service providers to help them evolve and execute their strategy.”

With the explosive rise of small Australian Financial Services Licensees (AFSLs), key aspects to consider in finding a business partner would be financial strength, experience and longevity, and the ability to build a strong relationship with customer support. 

Successful advisory firms would look for areas to add value, noting that their role was broader than just administration and investment management.

The paper stated: “In an environment where it will be harder and harder to beat the benchmark, advisers will look to anchor their value proposition on something other than investment performance.

“The behaviour of investment markets and the direction of interest rates are beyond anyone’s control, making it important for advisers to focus on areas where they can add the most value.

“That includes areas like financial education, goal setting and strategic retirement planning. In an environment of heightened volatility, regular client communications and interaction is critical to ensure investors don’t panic and deviate from their strategy.”

The ability to deliver advice and investment solutions using technology to derive scale benefits would also be the mark of efficiency and profitability, elaborated Tim Sparks, Bell Direct head of distribution and marketing.

“With increasing economic uncertainty, advisers are focused on adding value in the areas within their control such as budgeting and cashflow management, portfolio management and retirement planning,” he said.

“We are seeing the increasing adoption of managed accounts as advisers seek to drive efficiencies, better manage their exposure to risk and deliver a better client experience.”

Sparks added, “The return of inflation has also sparked a rethink of advice models. We’re seeing traditional stockbrokers and private client advisers move into strategic financial advice because they recognise that it is going to get harder and harder to outperform under current market conditions.”