When the pandemic first hit and markets went into meltdown in March of last year, Australians and particularly business owners needed good advice. We wrote about these changing tides of the financial advice industry in a blog entitled “Opportunities in a time of crisis”. Aleks Vickovich of AFR also reported last week on the opportunities that lay ahead for the financial planning industry, noting how the pandemic in 2020 shone a spotlight on the value of good advice, and the industry delivered. So if we all acknowledge the important role advice will play going forward, what will it look like in 2021 and how can we set ourselves up for success?
Let’s perhaps start with the challenges. One area of ongoing concern and uncertainty is the regulatory framework shaping the industry and consequently driving an increase in the cost of providing advice. Whilst FASEA is being disbanded, there is still a strong appetite from the Government and ASIC to implement many of the recommendations for the Hayne Royal Commission. Matthew Rowe, CEO of Count Plus who appeared on the expert panel of our last WowCrowd episode with Garry Lyon, expressed that more angst was to come in 2021. “I think there’s some extinction events and that’s around the education standards and the exam, and there’s also a big shift in the financial dynamic in terms of the economic drivers of advice with the banning of grandfathered commissions and rebates coming off.”
In late 2020, ASIC acknowledged these concerns and released a consultation paper that seemingly looked to identify avenues for simple, low-cost scaled advice. Many feel this is easier said than done and won’t prevent further exodus of advisers who continue to struggle to adapt their business model in this brave new world. An unintended consequence of the increased regulatory framework is that financial advice becomes out of reach to many Australians who can’t afford the increased fees associated with a shift to a commission-free, fee-for-service advice world.
So what about the opportunities? Hopefully, the events of 2020 made it clear to many that good financial advice is something we should all aspire to receive. As reported previously, only 14% of Australians use a financial adviser on an ongoing basis. In an ifa article last week, Eugene Ardino, Chief Executive of Lifespan Financial Planning referenced the recently released research showing that about four out of 10 Australians will seek financial advice over the next 12 months. If that is indeed the case, it is a substantial increase compared with past numbers. Adding to the fact that there are fewer advisers left in the industry, there will no doubt be orphaned clients seeking help and those advisers that have elected to stay and complete their educational requirements will benefit. The combination of increased demand in advice with lower supply, particularly from the large vertically aligned players such as the big 4 banks that have all sold off their wealth arms over recent years, will represent a substantial upside opportunity for those mid-tier advisers that have stayed the course.
Commenting further in the article, Eugene also references the importance of advisers to review their business model and ensure they are maximising the efficiencies within their business. “In a user pays, fee-for-service world, it is crucial for advisers to understand how they can maximise the efficiency of their practice, including finding the right technological solutions to both suit and highlight the advice they give their clients.”
Once again, this is a key opportunity as we move into 2021 to adopt new technology to improve efficiencies and reduce the cost of compliance as well as how we service clients by eliminating manual processes. Let’s acknowledge that some things won’t change. For example, the need to fill in forms, complete fact finds and gather financial information about your clients and keep it up to date. But how we perform these tasks can be vastly improved. Many advisers are finding opportunities to cut significant time and effort out of these processes by using myprosperity to streamline these mundane and costly tasks.
If you would like to check out the myprosperity platform and see how it can transform the way you perform these and many more tasks for your clients, you can sign up for a free 1:1 demonstration by visiting https://www.myprosperity.com.au/book-a-demo/