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A number of the weaknesses in smaller financial planning firms are rooted in a lack of understanding of their target client base, according to practice management consultancy E&W Strategic Partners.
The consultancy has conducted a series of financial planner workshops in partnership with the Financial Planning Association.
E&W Strategic Partners managing director Lap-Tin Tsun said business efficiency would become more important in light of the new Future of Financial Advice reforms, yet through the workshops he identified major areas of weakness.
He said where the planners fell short was in the time it took to conduct the initial fact finding interview, along with the inefficient use of software.
Tsun said on average a planner spends up to two hours with a client at their initial fact finding meeting, although this could be cut to as little as 15 minutes if they engaged in good marketing and had a clear understanding of who they were marketing to.
“What you really want is for the client to already have a pretty clear idea of what it is that you do and what you offer, and that you are the planner for them, even before they’ve walked in the door,” he said. “But that requires being very clear about who is the top client segment that you are trying to service and what it is that you are offering to them, and making sure that the proposition and message is very clear upfront.”
Tsun said a number of his clients had battled with simply marketing to their target clients, while others had not thought deeply enough about who made up their client base.
He said the complexity of financial planning software was also taking up planners’ and their clients’ precious time. Tsun said if planners understood their core client base, they would have a better idea of which planner programs were best suited and which ones could be adapted to their needs.
He said most financial planners cover up to 30 different areas of advice, but in reality they only specialise in one or two areas. By understanding their core client base and their needs, he said, planners could use the systems they already had to compile a template Statement of Advice, for example, which would save a lot of time.
He conceded that some financial planners may be overcautious due to the regulatory environment, but he said the Australian Securities and Investments Commission’s Scope of Advice relief meant it could be done.
