Licensees need to support financial coaching

Licensees need to look beyond their traditional focus on financial products and help advisers offer financial coaching to clients and alleviate Australia’s household debt crisis. 

The value of financial coaching – helping clients to save money with a budgeting, banking and cash flow program – has grown enormously in recent years, driven by client demand for help to save money over traditional advice areas such as super, insurance and investments.

It’s no surprise that this type of financial coaching is in such high demand, with the nation’s household debt-to-income ratio climbing to an all-time peak of 189 per cent.

With the perfect combination of supply (record bebt) and demand (Aussie GenXY’s looking for help to save), it is no surprise that according to the Netwealth AdviceTech Report 2017, 43 per cent of financial advisers already currently use some form of “cash flow and budgeting tool” (typically Xero, Moneysoft and Myprosperity) with their clients, and this number is expected to grow to potentially 68 per cent by 2019.

So why is it that over the four years that I have been running Your Spending Coach courses, and having trained over 250 advisers and mortgage brokers, that the number one complaint I still get is that “my licensee/aggregator doesn’t understand what financial coaching is”, and they all seem to say the same thing: “we’ll look at it on a case by case basis, but it probably needs to have an SOA”?

The problem for advisers (and their clients) is if the licensee doesn’t give them the green light to provide advice in this space or any sort of guidelines to work to, most advisers end up giving up or going rogue (not telling the licensee) and neither of those scenarios help the client in the long run.


Now the cynics would say that some licensees are too compliance heavy by default, but as there is no historical set of guidelines for them to work off, nor is there a definite position from ASIC on ‘budgeting and cash flow’ advice, they would have to develop their own guidelines from scratch, and this can seem like a big job inside licensee land. The issue is helping licensees find the value in providing some resources internally to develop these guidelines.

Traditionally, the ‘more established’ licensees have developed guidelines where there is a financial product at the end of the transaction, that they can also derive revenue from and therefore justify the spend.

This time around they need to look beyond the traditional view of financial products and financial product advice (the realm of the SOA) and see the enormous value they can provide for their adviser’s and their clients.

The solution is clear – licensee’s need to help their advisers deliver “financial coaching” in a compliant and consistent way.

It should not be ‘case by case’ or ‘compliance person by compliance person’. It should be driven by a set of nationwide dealer group standards. And for those that move sooner rather than later, not only will they be helping their own advisers, they might even strengthen their value proposition to future ‘recruits’ to their network looking for something different and innovative from their licensee partner.

Australian’s are facing a debt crisis that most of us haven’t seen before. And it would take a brave punter to suggest that wages are about to start heading north and interest rates south.

So the only realistic way that Aussies are going to pay off our record debt is to increase our savings (and use it wisely).

Financial advisers offering “financial coaching” will not only be delivering a great innovative value add for their clients – they will be future proofing their business through growth in GenXY clients.

And who knows, if their current licensee refuses to help them provide this type of solution to their clients, they might just go and find one that will. 

Steve Crawford is the director of Your Spending Coach and principal of self-licensed boutique Experience Wealth. 

Subscribe to the ifa bulletin

Receive daily online news,analysis, reports and business strategies
By signing up you agree to our Terms of Use and Privacy Policy

from the web

Website Notifications

Get notifications in real time and stay up to date with content that matters to you.