After years of regulatory change, industry reputation damage, uncertainty over superannuation and retirement income policy, and the most volatile global political landscape in recent history, it would be understandable if some advisers had some trepidation about the future.
Undoubtedly, dealing with so much externally-driven change hasn’t been easy and has been seen by many advisers as a distraction from servicing clients and building strong advice businesses. However, despite all the change and uncertainty, or perhaps because of it, I strongly believe there has never been a better time to be a professional financial adviser.
It’s all a matter of perspective. Those that embrace the future and the opportunities it brings will thrive, while those who see only the negatives and are unable to adapt will struggle both personally and in business.
If we step back and look at the big picture we can see that the financial planning industry now has the foundations on which to build a very strong future.
It is more professional, more vibrant, more technologically enabled and most importantly, much more client-centric. It is more confident in the value of the advice and service provided to clients, and clients have never required good advice more, or valued it more highly.
The Future of Financial Advice (FOFA) was a game-changer for the industry. It instigated the major shift from being product-driven to a fee-for-service client-centric model.
Advisers who have gone on that journey are really excited, based on the feedback they are getting from their clients. They love the personal engagement they are receiving, the fact that the whole process is focussed on their particular life circumstances and aspirations.
As a result, they are referring friends and colleagues, creating a virtuous cycle. Ultimately, this is what will positively change the reputation of our industry, like any other — satisfied clients.
Likewise, if we step back from the whirlwind of technological changes enveloping us all, we can see that many of the technological changes in our industry are moving us from product-centric to client-centric, enablers of quality advice rather than product distribution.
These are allowing advisers to provide better, higher-quality service to their clients — whether it’s 24/7 access, more frequent and more personalised communications, less paper, real-time updates, use of graphical interfaces and calculators, robo-advice, or access to the full suite of investment opportunities and client-focussed solutions such as managed accounts.
Advice focussed businesses have strong balance sheets and a clear strategy for the future and are able to invest in technology and support designed to help advisers thrive in the provision of advice, because that is their core business.
Streamlined efficiencies around client management and administration mean that advisers can focus their time and attention on the client — getting to know them better and helping them navigate their financial future to achieve their life goals.
Few other professions have come so far so quickly, in adapting to and driving changes in the digital and more client centric world. If we step back and look at how far we have come in a short period of time we should be proud.
The changes to adviser regulation, licensing and professional standards, will ultimately underpin the professionalising of the industry, its public reputation and the value clients place on quality advice.
We are seeing strong, growing alternatives to the large institution model of captive dealer groups.
These alternatives are focussed on enabling advisers to provide quality advice and services, rather than being seen as distribution arms of financial institutions. Many good advisers, both those with established businesses and those seeking to build their business, are now understanding the difference.
Advice focussed businesses have strong balance sheets and a clear strategy for the future and are able to invest in technology and support designed to help advisers thrive in the provision of advice, because that is their core business.
We need to keep challenging the status quo and advisers need to keep challenging us to ensure we stay focussed on helping them be the best advisers they can be.
Then if we step back and look at Australia’s changing demographics and demand for advice we can see that it is growing rapidly.
The ageing population, both in demographic terms and in people’s lifespans, the inter-generational issues of managing wealth, and the complexity and ongoing change to regulations, means there is a huge pool of unmet demand as the Baby Boomers move into retirement, the Generation Xers prepare for it and the millennials start to think about their long term future.
The intergenerational transfer of assets and the role of baby boomers now in caring for their parents, will require a whole new level of support around estate planning, Centrelink, and aged care.
The constant stream of global and economic instability only reinforces people’s urge to take control of their future, to have a financial plan and the assurance of a trusted adviser on their side. In a world that can sometimes appear out of control, people want to control what they can.
So, as the new year gets underway it is up to us, advisers and advice businesses, to take control of our destiny and the wonderful opportunities we have to grow the profession and the industry supporting it, by helping Australians take control of their financial future.
John de Zwart is the managing director at Centrepoint Alliance.
