As Thompson Financial Service, his advisory, looked to offer a bit of everything, now as Skye Wealth, Mr Thompson has focused his efforts on the realm of life insurance, and is kicking himself that he didn’t do it sooner.
“The business has grown heaps more than it ever did the eight years prior, owning a business,” said Mr Thompson on the move to focus on life insurance. “From a client experience point of view, just doing the one thing and just solely focusing on how do we make this as good a process as possible has been an incredible move.”
According to Mr Thompson, when financial advice is streamlined, with clear mapping of the beginning, middle and end, the client experience is improved, driving a positive atmosphere around the industry.
Now he encourages other advisers within the industry to take advantage of the benefits he’s found, saying that they will find success should they “pick a niche and go all-in”.
“We know exactly where we work and we don’t work,” said Mr Thompson, “and as a generalist, those lines can be really blurred.” In his opinion, the issue with generalist advice is that clients can seek advice on something specific, and then come out with a product that they weren’t looking for, as the adviser was not the right fit for them.
“If you look at the public spaces of the world, which is Facebook groups really, and you hear commentary about what a financial adviser is, you don’t have to look too far to read where someone comments and says, ‘Don’t go to a financial adviser because they’re just going to sell you insurance (or other products that clients didn’t want advice on)’.”
For Mr Thompson, the perception of advice in the community will only become more positive should the process become less ambiguous, as clients will know exactly what to expect when reaching out for advice.
In making specialised advice offerings work, however, Mr Thompson said it was important that the advice industry worked more collaboratively, sending clients to the right advisers when their needs cannot be met by the practice, even when it may mean a loss of business in the short term.
“The better we’ll serve the community when we’re not trying to put a square peg into a round hole, which sometimes happens,” he said. “From a client point of view, as long as we are clear exactly on what we’re providing advice on and what we do and what we don’t do and we surround ourselves with other professionals that fill the gaps that we’re leaving — then having a really clear and simple client proposition I think will really serve clients in the long term.”
Mr Thompson opted to focus on life insurance, as he felt disenfranchised by the requirement to charge each client $3,000 in his generalised advice service. He didn’t think clients were getting a fair deal, as the advice given often covered fairly basic items.
“There is a value exchange, but at what level is that value exchange in the client’s favour?” he said. “If you’re on a household income of $100,000 a year, do you really need to spend $3,000 for this advice?”
Mr Thompson feels that the way the generalised financial advice sector is set up, largely because of ongoing compliance costs, means that it is not for the everyday Australian.
By specialising in insurance, Mr Thompson believes he is providing a better value exchange for his clients, as customers get valuable advice in the areas that they want, without the $3,000 fee — largely facilitated by the remuneration provided by the insurance industry.
According to Mr Thompson, since the shift in focus, the improved value proposition Skye offers has shown. A key element of improving the value exchange, he said, has been identifying when Skye is not the right fit for a client.
Now, Mr Thompson hopes his peers follow Skye’s lead as the need for advice continues to grow.
“This is an incredible business to be in,” he said. “More people need advice than they ever have in the past. The uncertainty that COVID has provided has meant, in my view, that people will be seeking clarity on their finances.
“For the next 25 years, anyone who is going to be a potential client will remember COVID and the impact COVID had on our finances.”
For Mr Thompson, the industry can learn from other sectors in this challenge. In his view, it is very rare for a business not to specialise in something, whereas in advice, it is commonplace to offer advice on a range of wildly differing fields, from investment to insurance.
“Every good business out there, they don’t start a business offering everything to everyone,” Mr Thompson said, “but somehow financial advice businesses, when they open up a financial adviser business, they think it’s a good idea to offer everything to everyone. “From a straight business point of view, it just doesn’t make any sense.”
Alongside the streamlining of advisories through the simplification of their offering, Mr Thompson also believes the industry can continue to embrace technology to increase efficiencies and experiences as client bases continue to grow.
“How do we serve our clients as best as possible?” Mr Thompson asked. “Is it really helping our clients asking them to print out a paper-based form? “If we can use technology to make us more efficient, it either helps my bottom line or helps us charge our clients less.”
While COVID has forced advisers to increasingly embrace technology, Skye has been working entirely electronically since the second half of 2019, with all meetings conducted remotely.
Mr Thompson explained that early digitisation has improved the business’s efficiency, alongside improving the client experience.
Skye’s business primarily serves younger clients, with Mr Thompson advising that the average age of his client base is 32 years old. As such, other advisers may argue that their older client bases may not be as tech literate.
However, Mr Thompson said this is a misnomer as, in his experience, older clients are just as happy to complete online forms.
“I don’t necessarily subscribe to that idea (older clients not being as tech literate),” Mr Thompson said. “My mum and dad are both retired. If I asked them to fill out an online form, my mum would just be on her iPad, she would be able to easily fill it in.”
Mr Thompson’s experience has been that only about one in 150 clients struggle with filling out online forms. To overcome this rare challenge, Skye provides these clients with a PDF version of the form.
In his view, hesitancy to embrace technology stems from advisers being afraid to build the business that they want. Much like the issues with generalist advice, Mr Thompson believes that advisers should focus on what makes their business work, as opposed to trying to create a service for any and all clients.
“I think people are scared to make a change,” he said. “When I moved to Zoom meetings — this was before anyone knew what Zoom was — I had to explain to people what Zoom is and I had to call them up before the meeting and ask them how they’re going downloading Zoom and jumping into the meeting.
“I communicated to my clients that this is how we do business. If it doesn’t work for them, then we’re not the right fit for them and I can introduce them to an adviser that is more suitable.”
Mr Thompson explained that the pandemic had actually come to assist Skye in this regard, with products such as Zoom becoming commonplace across the industry. Again, he hopes that advisories will continue to run with this as Australia looks to make lockdowns a thing of the past.
For Mr Thompson, there is a bright future for the financial advice industry. Advisers, he tipped, need to find their niche and build a business they are passionate about, while keeping the client experience central to this goal.
