Recentlyon a flight, I found myself sitting next to a couple also on their way back home to Airlie Beach, near Mackay. Striking up a conversation, I found they had moved some time ago from Sydney.
I asked them why they had moved. The answer was the usual litany of praise for the lifestyle of the tropics as well as concerns about crime, personal safety, the rat race, the traffic and so on.
Many people have decided to make the lifestyle decision and move to a regional or rural area. Alternatively, a number of people for work and employment-related reasons have moved to metropolitan locations.
What has this got to do with operating a financial planning practice? A lot really. In fact, it’s fundamental. Isn’t financial planning about earning, saving and applying that to create a lifestyle?
Why would financial planners operate in a regional or rural location when they could do better, business-wise, in the big city? No doubt in the metropolitan locations, individual portfolios would be larger and practice revenue is likely to be higher on average. However, practice operating expenses are lower in the regions.
So what’s the beef? Personally not much. From a business perspective, I think players in the financial planning industry can learn a lot from their country cousins.
Generally, the difference, from where I sit, is that the nature of practices in regional areas are relationship businesses whereas in the city there is an effort to be more corporate. The anomaly is that those practices who are skilled at developing good client relationships in the big cities are slaying them in the aisles. To us it comes naturally.
In Mackay, we have clients who are third generation.
BDMs who are paid to promote their companies’ products (and to do that you need a business relationship) are getting worse at developing relationships.
Generally, in terms of adviser quality, I find very little difference between city advisers and those in country areas. Per capita, I would guess, you will find a similar range of competency levels.
Again generally, practices in the regional areas are broadly based, whereas city practices tend to specialise either in the product or service they offer or target the niche market they have gravitated to.
The broadly based regional practice would provide advice and product delivery for the whole gamut of financial services. The regional adviser needs to be all things to all people.
I prefer the broadly based practice. The simple reason is that once you have secured your client, you wrap around the client all the services, banking, investments, super, loans, insurance, tax compliance and so on that they require. There are other reasons. Your business by its nature is not relying on any one product or service, it simply relies on you. You have a variety of income stream sources — reducing business risk. The ongoing regular contact also develops solid client relationships. You only need to have a small number of clients.
The greatest advantage is that the broadly based practice will leverage off each individual product or service. However, you have to have a practice system that assists in managing the diverse services.
What are the concerns of advisers in regional locations? There are many, but mostly they revolve around the tyranny of distance.
Some examples. A product provider recently invited our advisers to an Adviser Briefing to be held in Brisbane. Our Townsville adviser would have needed to fly 1,300km, whereas the city adviser’s main concern would have been where to park. That’s one reason. But if you factor in the time out of the office (it could easily take three days), the cost, and the accommodation, it simply is not viable.
If an adviser cannot attend, the best you get is a PowerPoint presentation with bullet points. The academic standard for presentations is you have to prepare a properly researched paper, which is usually quite detailed and extensive and you speak to the paper in effect pointing out the conclusions and salient points, usually allowing the attendees to take the paper away to digest. Most presenters in financial services don’t do that. It’s a bit lightweight quite frankly.
It should not be too difficult in this technological age for a product provider to video a presentation and e-mail the paper and PowerPoint presentation.
In fact, it may save the cost of road shows and so on, if it was all done in Sydney, using technology to make it available throughout the country, instead of the cost of transporting the personnel and cost of setting up in each location. In fact, you may capture city advisers who simply are not able to attend.
To give credit to others, there are certain fund managers who make the effort of regularly conducting content-heavy road shows, including ‘heavy hitters’ as speakers. Guess who gets the most business?
About two years ago we resigned from the Financial Planning Association. Reason: no service. In capital cities, there is obviously a focus of support to the financial planner. In regions, very little.
As an alternative example, in Mackay, there is at least on an annual basis, a highly publicised visit by the presidents of the accounting and legal bodies. It gives the members an opportunity to air their concerns and it gives the organisation some insight into the local environment the practitioners work in.
Ask Victorian Premier Steve Bracks and Queensland Premier Peter Beattie where they won their respective elections and where the risk is of them losing it. The regions. Think about it.
Jack Houwing is the director and authorised representative of Mackay-basedFinancial Options PtyLtd.
