Moving to strategic advice
The advice industry will look vastly different in 2020.
There will likely be more direct, automated advice solutions in the market, but the most profound change will be the transformation of traditional suburban financial planning practices into diversified advisory firms. Already, forward-thinking advisers are moving to offer comprehensive strategic advice.
Two key changes are driving this trend:
• Advisers must now provide ongoing service and advice to receive ongoing fees and commissions; and
• The slashing of life insurance commissions under LIF means it is no longer financially viable for advisers to focus on risk advice.
There are two main ways advisers can approach the delivery of strategic advice.
• Provide advice on everything in-house; and
• Specialise in a couple of key areas and refer clients to another professional for advice in non-core areas, under a formal referral agreement.
The model that’s right for one adviser may not be right for another. It will depend on factors such as a practice’s size, type of client, resources and long-term objectives.
Whether an adviser opts to do it all in-house or outsource some functions, practices will increasingly look like a one-stop-shop striving to meet their clients’ total financial needs.
In 2020, advisers will have deeper and broader client relationships and command higher fees, given they’ll effectively be the centre of their clients’ financial lives.
In addition to the advice they provide directly, they’ll oversee and manage the delivery of other services, for example mortgage broking and lending, and business planning.
That will ultimately lead to improved client outcomes and greater client engagement and satisfaction.
No such thing as BAU
Practices that are already on the journey to strategic advice won’t be perturbed by the way the future is shaping up, but for those who have traditionally focused on risk, it may be a daunting concept.
But they can’t ignore change. At this critical juncture, advisers need to think about whether they need to retrain and reprogram for a fresh career in their old profession or plan a swift but successful exit.
Business as usual isn’t an option.
Whatever their decision, to ensure the industry charges ahead and clients are adequately taken care of, everyone must work collaboratively to retain invaluable knowledge and skills.
Much has been written about the intergenerational wealth transfer that’s set to occur over the next 20-30 years as the baby boomers and their parents pass away and pass on the wealth they’ve accumulated to the next generations, but intergenerational wealth is so much more than financial.
It includes intangible wealth too, including soft skills like empathy and compassion that are an essential, albeit under-valued, part of an adviser’s proposition.
What is strategic advice?
Strategic advice considers every aspect of a client’s life.
It takes a holistic view of a client’s situation and addresses their total needs, both now and in the future. In a twist to the traditional approach, strategic advice starts by asking clients, ‘What’s more important to you than money?’
Only by understanding what clients’ value the most, can advisers consider the best approach.
In addition to traditional advice areas like superannuation, investments and insurance, it includes emerging areas like retirement incomes, aged care, estate planning and intergenerational wealth transfer, for which there is no ‘product’ solution.
Strategic advice is the solution.
There may be no product sale at all. It’s a value proposition based on ongoing advice, coaching and mentoring to keep clients on track towards achieving their goals.
Once the strategy is set and implemented, advisers must continuously review a client’s situation to ensure the strategy remains relevant and effective.
The goal of strategic advice is to help clients understand their total financial needs and get (and keep) their financial house in order so they can get on with enjoying life.
Christopher Blaxland-Walker is general manager, distribution, at ClearView Wealth
This is an extract from a ClearView succession planning white paper called “What’s old is new again”, which will be released later this month.
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