Late last year, the winners of the AFA Adviser and Practice of the Year came together at Zurich's Sydney offices to discuss what disruption really means for the advice industry and how technology will change the way advisers work with their clients
Richard Dunkerley, head of marketing and communications, life & investments, Zurich: I think most of you know that we have a long-standing association with the AFA Adviser and Practice of the Year Awards. It goes back 13 years and, from our perspective, we've always felt that the best way to improve the levels of professionalism within advice and improve the reputation have been to find best practice – wherever that is.
Without being overly dramatic, winner of the Practice of the Year Paul Kearney and Adviser of the Year David Reed, and the practices they represent, are the new standard bearers of a profession which, to be honest, has been under a great deal of scrutiny and unfair pressure from a number of quarters. As advocates for the advice profession, it puts a lot of responsibility on their shoulders.
One of the most frequently uttered words this year has been robo-advice. What do you think when you hear that?
David Reed, retirement adviser, The Retirement Advice Centre: I've always been an advocate for it in terms of a mechanism to generate clients. Earlier this year I went to a tour of Google and a company called Hearsay Social, and that totally changed my mindset in terms of where roboadvice is heading.
Before, I was a three out of 10 and now I'm a 10 out of 10 in terms of the change that's going to happen. If I have disengaged clients, and this really long tail of clients that I'm not communicating with, they're going to go. They are going to cop so much noise from companies that they're going to be lost and that will have a dynamic impact on the overall advisers business.
RD: So the bigger threat isn't the technology, but more the inertia? Are your colleagues threatened by it or in denial, or looking to incorporate elements of that approach into the business models?
DR: I can't speak for them, but for us it was more than 10 years ago we got the opportunity to start with a blank sheet of paper. One of the benefits of retirement advice is that it's never homogenous. Each household has to be individually managed in terms of their vision, aspirations and how their money is managed.
RD: If we talk more broadly about technology and specifically how it can improve the clients' experience – Paul, what are you doing?
Paul Kearney, chief executive, Kearney Group Financial Services: We've got a software team inside the organisation who are busy getting our first product to market. But technology generally is an exciting empowerment mechanism for the profession. To pretend that some of what we do at the moment isn't commoditisable work is to kid ourselves. If we think we need to hang our businesses on stuff that can be automated, we're going to crash and burn.
So, do people need advice? Yes, they need advice. But do they need you spending hours thumbing calculators and adding up spreadsheets? No, they don't.
They need you to actually provide advice. I think the way financial advice is disseminated and the way our clients engage with advice will be dramatically different in five and certainly 10 years' time. The old SOA paper document, which gets reviewed twice a year when the client comes to see you, will feel like the steam engine in not too long.
People will engage in a much more continuous sense with their advisers, using technology as a medium or platform to get there, but the magic will be still be in the delivery of advice and the knowing of the client. That's where the magic is and that's the space that we need to own for the good of the clients as well as the good of ourselves. So to David's points: clients that aren't engaged are going to be disconnected from our businesses. Do we want businesses that have a tail of disengaged clients? No, we don't. That's not a healthy business model, and that's the past.
RD: It also does not create a healthy business perception.
PK: So in a multidisciplinary setting, a few of the things we've been working on are: how does the practice actually know the client? There are no software products in the market that do that, so we've created one that gives a clear picture of what's going on with that client and how they are engaged. There are reporting functions to make sure that colleagues are in conversation with each other before the clients come in.
We always have two, three, four advisers involved with the client, so that if someone is not there to see them, there is a seamless transition of information and there is a lot of work to do. We're doing a lot of work in seeing how we can improve.
We think financial planning is in its infancy [but] this kind of model is way, way, way [more] in its infancy, so we're working on some ideas of making that experience real for the clients who are dealing with us.
We all know technology has the power to transform everything, but someone is going to crack this open and invent what it's going to look like in the future, but who's it going to be? Are we going to let it be dictated by software houses, or are we going to figure out what needs to work and do it ourselves? I feel like that's the opportunity ahead of us.
Caroline Hendra, senior manager - communications, brand, marketing, life and investments, Zurich: Is your model like an institutional banking model, where you have your account manager who is responsible for a client, the 'champion' of the client?
PK: No, it's shared. They have a number of people in each department that clearly work together in the eyes of the client. Ours is a collaborative model at the top end, and the client knows they are talking about their situation rather than by a client manager.
CH: So the technology becomes your glue in a way?
PK: Yes, and one of the great things that came out of the award was a deep and detailed client survey. The feedback was very good, and that's the test. Do the clients feel satisfied with the service they are being offered? The practice knows them, the adviser knows them and when you're succeeding on those metrics, then I think it's proof that something is working. The big risk is that clients feel like they are being handballed when they're dealing with someone over here, but they are not feeling that way at the moment.
What's really important, and I think we've won this battle in the practice, is: no adviser feels like it's their client. A client is a client of the practice and the adviser is who is working with them at that time, and there are always a few of them anyway. The client belongs to the practice and you will want to work with someone who you work well with. If I heard someone say 'that is my client', I would stop that language immediately. They are a client of the practice.
Our model is that you will have multiple advisers and if you want to take up other services in the practice, and most do over time, that's OK – our clients like that model. We teach them that having an adviser is more of a danger to them than a benefit.
RD: For some people, the LIF reforms could be seen as disruption. What are some of the true disruptions that keep you awake at night?
PK: We've got technology and everyone looks at that as a major disruption. I think the major disruption is going to be our clients' expectations of what we do right now.
RD: Is that increasing?
PK: Yes, quite rightfully. Getting great financial advice makes a huge difference to people's lives at any stage in their life. Financial advice is not about investment advice. It's a part of it, but it's only one part. It's a segmentable part, and for accumulators I'd suggest the strategic elements are really important.
People don't get to know what's possible, and as that expectation grows, the demand for us to provide that is going to be the greatest disruption. We use technology to get there.
CH: How do you deal with the pressures on people's time, how do you stay front of mind with clients?
PK: So much of financial advice is education and if you can help people to know how important it is to stay on top of this stuff and if you haven't got time, leave it to the people who can do this for them, they'll engage. Our role is to understand people are time-poor and create a service that can deliver to that.
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