Nathan Fradley, senior adviser at Tribeca Financial and director at Ethos Australia, said some advisers are feeling the pressure to transition to financial wellbeing and, as a result, are deciding to depart the industry.
“I think a number of advisers left the industry because they couldn’t do it or they felt they couldn’t do it,” Mr Fradley said on a new episode of the ifa Show podcast.
“The emergence of the money coach, the podcast [and] the finfluencer have come about because under the current constraints, people in the industry have gone: ‘I can’t do this.’”
Mr Fradley explained that financial wellbeing has yet to be adequately defined.
“Financial wellbeing has not really been well defined yet, but I think it’s going to be the new thing. If you go back five to 10 years ago, it was all holistic advice and that was all about what the adviser is doing. Financial wellbeing is, ‘What does the client feel?’ It’s a complete flip of the lens. It’s no longer about what advice we’re providing. It’s about what value we’re creating,” Mr Fradley said.
“And I think that’s the differentiator between the great advisers at the moment and the ones that are still catching up, is financial wellbeing means something different for all clients. As an industry, we still have to figure out what that looks like, but fundamentally, and this is from the research, it’s a feeling of freedom of choice and a sense of security. It’s the ability to know they’re okay, but they can also take risks. It’s the ability to be able to spend money, but not too much money because they don’t want to,” he continued.
Personally, he said, the “best” advisers are the ones trying to truly understand their client in order to create a genuine connection.
“I think the best advisers now, the ones setting the standard, are saying what does it look like in 10 years for you from a social interaction perspective? How are you gaining your social needs once you’re retired? Or how are you building meaningful connection with your friends and family? What are you doing from a sense of purpose and how do we facilitate that and money being a tool to enable that?
“And that connection becomes far more than just, ‘Well, they did my super and insurance.’ That’s the hygiene, that’s the easy stuff. This becomes really understanding who we’re working with, intrinsically caring for them and to a point where we are taking what they say is important and what they do, and we are combining those two things to be the same, in the same direction,” Mr Fradley noted.
Listen to the full ifa Show podcast with Mr Fradley here.
Mr Fradley’s comments come after a report released by Investment Trends last week which found that one in four financial advisers are expected to leave the industry within the next five years.
The research firm’s 2022 Adviser Business Model report found that 37 per cent of advisers intend to switch licensees and 70 per cent of those suggested they’ll switch to a self-licensed model.
Meanwhile, the total cost of providing financial advice to the typical client has increased from $2,850 in 2020 to $3,280 in 2022.
Last week, the Joint Associations Working Group (JAWG) — made up of 12 key associations including the FPA, AFA, FSC, SIAA, TAA and CA ANZ — launched a new survey which aims to examine the cost of advice and its impact on the process, which will then be provided to the QAR ahead of its release in December.
“The cost of advice is a key issue that the QAR has the opportunity to address, and our research is designed to get detailed information on what effect each piece of legislation, regulation and licensee obligation, and the like, has on the cost of providing advice to Australians,” FPA’s head of policy, strategy and innovation, Ben Marshan, told ifa.
“We’re encouraging all licensees and practices to take part in the survey which is taking place over the course of the next week.”
You know what will be the ultimate irony from the QAR?
Accountants get their exemption back under the guise of being educated and trusted and don’t have to write SOAs, no fee disclosures because they have always done direct fees …(haven’t they?)…Industry funds get a carve out for intra fund advice, with a bare minimum of compliance advice, no fee disclosure required because their clients don’t pay fees for advice….directly…maybe a quick file note that will be their SOA, and experience comes back into play negating the need for further education.
Existing planners still required to do some sort of SOA and fee disclosures.
And for those who have met the FASEA education…well sorry, that was just a test of survival and damm, you did it.
See the inequity that arises again by the carve outs?
And finally, all those who left and failed the exam…… well how will they feel?
Oh….influencers and the bare foot bloke are all ok as well….just keep doing what they are doing.
Does anyone else think the QAR will just throw up some inequities?
Well said.
There is no correlation between the two. Advisers have always focused on knowing their clients intimately and as a mutually exclusive fact, many are leaving the industry mainly due to drowning in red tape and funding the compliance economy. The topic and views are a bit pious and not really founded as a factual correlation.
SO DISHEARTENING ALL THE BACKWARDS AND FORWARDS .
WE LOOSE SIGHT of what really matters and comprehending the client and understanding their needs and goal s , I AGAIN HAVE HELPED NUMEOURS CLIENTS OVER THE YEARS .
some OF WHICH ARE NO LONGER WITH US , HOWEVER I pride myself that their families have kept a home or business and treat me with reciprocal respect and longstanding in the knowledge that a legacy has been left and that I helped along the way.
Truly understanding families , business owners takes time and trust .
$3,280 ????? That is way off the mark – As in too low.
Needs to be a minimum of $3,600 pa, just to take inflation into account. My barber’s bill went up 20% this week.
Yep. You couldn’t open a file for less than that without losing money.
Advisers are just leaving the industry due to bad legislation, and some advisers just love helping as many ordinary Australians as possible. You can’t do that anymore. Long waits with Centrelink and the QLR proposing special exemptions for Super funds will further drive that departure. I saw it with FOFA and the drop-off in enquires caused by the very first carve out. Over the coming 5 years once more carve outs are provided, the only people suitable for human lead advice will be the ultra high worth. Not high net worth, but almost a family office business having a handful of clients 5-50 range. Not everyone enjoys that model working with ultra-wealthy but that’s where advice is going.
There is definitely a shift to the human side of money for financial planning. That is to be expected, 30 years ago consumers had to use financial planners for products that is no longer the case. So to add value there is strategic advice but also understand clients around their money a lot more. We a bit behind in Australia, in the US CFP board has introduced Psychology of Financial Planning and if you study financial planning now in the US you have to learn it.
“….. had to use financial planners for products that is no longer the case”
Really?
Agree. Advisers will recommend products that suit them. Why don’t they recommend industry super funds rather than super platforms? Easy answer – they cannot debit the industry fund client account for ongoing fees. And what do they get for that annual fee – a cup of coffee and pieces of paper once a year. Why don’t advisers charge a client a fee each time the client needs advice?
Advisers don’t recommend Industry funds because industry funds do not value their unlisted assets with any type of honesty or accuracy. So imagine believing your investment portfolio is worth $100,000 when in fact it’s only worth $80,000 because assets havent been revalued like retain funds do daily. Then consider that some Industry funds might collectively decide to overvalue certain assets when they do revalue these…again making them look good, when the truth is something different – that’s why many advisers don’t recommend industry funds…
Agreed.
Go call an industry fund and ask them to complete a simple request…..
Advisers dont recommend Industry Super Funds in the main because they are so hard to deal with, their systems & reporting are rubbish.
I left two clients (husband & wife) in their respective Industry Funds because they had initially indicated they wanted to get set up correctly & then exit an ongoing relationship after a year or two. That’s been a massive mistake that costs the client more as I’ve had to renegotiate my fee because the industry funds make working with them such an absolute pain. There is no adviser overview, everything is at least 30 minutes on the phone.
You try to do the right thing by the client & Industry Funds still think they’re prosecuting the Compare the Pair wars from 5-10 years ago…
Client of ours rang Cbus twice she is 60 Y.O. not working and was informed she could not withdraw any of HER money till she was 65y.o. Thats a disgrace
“….. had to use financial planners for products that is no longer the case” – who does this now then?
More like they couldn’t pass the FASEA exam and decided to call themselves “money coaches” or some other like import
Oh please – what about Advisers / CFPs who have passed the FAESA exam and are also Money Coaches? Where do this group fit in? Im would argue it is about ensuring the client’s needs are met more holistically. Money coaching is not necessary for every client but for those who need it, it supports and prepares a client to be advice ready and seek quality advice when they are ready and needing it btw…coaches are not competition. Read the Money Coaches submission to the QAR…broadened my mind.
Are you sure those that are leaving are not the Money Coaches and finfluencers. We would never know because they don’t have the BS compliance, license and regulatory system that we have!! As I have said many time…Money coach or write a book a much easier way to make money…maybe we throw property spruiker onto that as well.
finfluencer are just providing unlicensed advice or are charging the product providers marketing sales via a different channel no different to product flogging from the bad old days.
How ludicrous to suggest advisers are leaving the industry due to an emerging requirement to understand what clients really need and to add value for their situation. Advisers have always done this. There is nothing new in it. Anyone who suggests otherwise must be selling snake oil of some description. The reason advisers are leaving is regulatory persecution. Plain and simple.
I couldn’t agree more in my 34 years as an adviser I wouldn’t work with anyone that I would not take home to meet my family. I knew more about my clients’ ambitions, fears, hopes, and family intricacies than their closest friends.
I left because after 34 years of 40 hours plus of regulated CPD at 64 I needed to get a degree because I only had a diploma. It didn’t matter any of the other specialist qualifications I had obtained. Even now I see the results of my work with people living comfortably in retirement, being protected by the insurance I put in place which sadly some of my clients and their families have had to use. Yes, the industry needed some work but how many good people have left this great industry through overkill and short-sighted bureaucrats and self-interested pollies?
in short, you got replaced by Real Insurance and a TV commercial….specifically bad legislation that disadvantaged you and significantly advantages another party and that’s what QLR is going to do. Advisers that just want to talk about super, and investments will be next. You can’t have the type of conversations Nathan is talking about with low to middle networth clients as they’re stuck in survival mode.
No, I got replaced by poor policy and vested interests, I was able to run a business that catered for all client classes by having good systems and software, and I started to use it from the very first options. Granted the service offering was different for low to middle, compared to high-net-worth clients. Changes to legislation have now disadvantaged those in our community that need help the most, they are now prey for the large funds and industry super funds. I was a holistic adviser now only high-net-worth clients can afford this service. The legislation has faults that mean you have to see a specialist-trained adviser rather than a GP who can refer on. Agreed those who just want to handle single aspects of advice like Insurance Investments etc.. will be hard pressed. A better system would be qualifications suitable for the type of service you provide like Accountants, Doctors and Lawyers do but that would be common sense.
Like most advisers, current and past we could write a book on this subject but those in control would not listen or read them.