Speaking with ifa, business coach and co-founder of The Wealth Network, Dean Holmes, argued that advice practices need to prioritise increasing the number of support staff rather than advisers to boost client capacity.
Holmes explained that because the profession cannot rely on more advisers joining the profession, the focus should be on figuring out how advisers can service more clients to meet the rising demand for advice.
“There’s not enough advisers in general, and I don’t think all advisers are working at maximum efficiency. Obviously the start-ups don’t have many clients, but even when I look at the established businesses that are doing well, I think the advisers have capacity. So, it’s really important that we think about that,” he said.
“If there’s no new advisers coming into the industry or the new advisers don’t even offset the retiring advisers first and foremost, there’s so many more Australians that need and want to pay for advice. There’s plenty of Australians that need it and will happily pay $5,000 a year for advice.
“So, if we’ve got no more advisers, we’ve got to focus on the efficiency problem, that each adviser has to see more clients, which I love. Advisers only like to see clients, they want to do meetings, they don’t want to do everything else.”
He argued that the focus needs to shift from trying to attract new advisers to increasing the number of support staff to improve efficiency, and thus maximise client capacity.
“That requires us all to build bigger businesses. I think the one-man band kind of has to disappear as we build bigger businesses. Not a lot more advisers, but just more support staff around them so that they can actually get their work done,” Holmes said.
“We’re not going to make any more advisers, we know that. So let’s get our businesses more efficient so at least we can serve more clients per adviser and obviously make a little bit of money along the way, but the end outcome is more Australians will get advice if we were all more organised.”
He added: “We need to get them in all the other roles like client service and paraplanning, all of that. Let’s not try to get more financial advisers because we know that one’s too hard.”
Why he wouldn’t recommend an advice degree
Despite the profession’s desperate need for new talent, Holmes said he wouldn’t recommend a financial advice undergraduate degree to young people as it doesn’t allow for any flexibility on their career path.
“If I was talking to someone thinking about uni, like an 18-year-old, and they’re coming to me saying, ‘What course should I do at university?’ I, unfortunately, wouldn’t recommend that they do the financial planning course because if you do the financial planning course, you can only ever be a financial planner,” he said.
“But if you do investment or accounting, your career choices are just so much broader. And that’s a great thing. In the mentoring context to an 18-year-old, I’m like, you don’t know what you’re going to be good at. You don’t know what you’re going to be interested in. You have no idea as an 18-year-old.”
He explained that he would instead suggest a more generalist degree to start and if, down the track, they do want to pursue a career in financial advice, they can then take the necessary steps to become qualified.
“Go into finance, go into accounting, because then you can go, you can travel the world with those skills, you can see all sorts of things. Whereas if you go to financial planning, guess what, you can’t even go anywhere else in the world to work. And you can only work in financial planning companies,” Holmes said.
“You can’t go and work for any investment bank or go and work for an accounting firm and things like that. You really restrict your options. And if you really want to be a financial planner later on, you can be, you just have to do a little bit extra study as a result.”
WT Financial Group’s managing director, Keith Cullen, echoed a similar sentiment on a recent episode of The ifa Show, stating that the profession struggles to attract new talent, favouring degrees with broader career options.
“I know a lot of people are out there talking about this whole notion of, ‘We need to make it an attractive profession for kids to go and study’. Well, my daughter is in year 10 and she’s recently had her careers nights and I tell you, if I had been sitting there with a trestle table with a sign above it saying study to be a financial planner, it would have been a very lonely table to be at,” Cullen said.
“However, there were long queues at the economics and the business and the commerce tables because kids want to go in and they want to study something that gives them options, what I would call a generalist degree. Once you’ve completed your degree or you’re a long way through it, this is a very exciting prospect.”
Agree with the idea of first studying a generalist degree. Aside from career options, I think you need to have life experience to be an adviser (in my view) as so much is about soft skills.
In regards to hiring more support staff to be ‘more efficient’… pffft. Not really efficiency, more injection of capacity in a cheaper way than hiring an additional adviser. Extracting more value out of technology is where efficiency is more likely to come from. However, many of us struggle to keep pace with it.