This time last year I was watching the fallout of the Hayne Royal Commission and it seemed the daggers were out indiscriminately for all financial advisers and major banks. The 54 recommendations directed at the Federal Government to enact into legislation received huge exposure and the pressure was on for the Government to implement these at pace. 

As the Commission was underway, the mood across the sector was largely that these changes were overdue and the industry needed a clean up. By 2019 that quickly turned to a sense that the industry was now under fire and that there were various knee-jerk recommendations being made to appease the public opinion directed at the financial services industry. 

It’s often the case that one rotten apple can spoil the barrel, or in this case, a few bad advisers can wreck it for the whole industry. The truth is that only 14% of people use an adviser on a regular basis and those who don’t were probably not inclined to go racing to the aid of an adviser when they were seeing the very public dressing down of various rogue advisers during the Hayne Commission. 

 Having said that, I know that many have felt that the shake up from the Royal Commission will ultimately produce better outcomes for the industry. The phasing out of trail commissions; moving to fee for service; a focus on value; eliminating product-aligned advice and lifting the bar on education via FASEA will hopefully bring about a more capable and credible advice industry. 

Then along rolls 2020 and suddenly we are in the midst of a global pandemic. And arguably worse than the widespread health threat to society, we are now in the midst of an even more damaging global financial crisis that threatens to dwarf the massive economic shock that occurred back during the GFC in 2008. As the government has scrambled to minimise the impact of this crisis and launched various stimulus packages to bolster the economy, we are seeing individuals and small business owners in financial distress, the likes of which we have never seen before. 

It has been encouraging to observe the response by the advice industry generally and I can say from where I sit it has been positive, immediate and welcomed. 

Most advisers I have spoken with in the myprosperity@home interview series have rallied to the cause in a way that speaks volumes for the value that the advice industry can and should bring to the communities they serve. Many advisers have been helping small business clients get their heads around the JobSeeker and JobKeeper initiatives and help clients navigate the application process and shore up financial support available via these programs. Many more are supporting individuals to manage budgets, preserve cash flow, trim expenses, manage debt, apply for moratoriums on rent and other financial commitments and basically help clients ride through the storm. Recognising the important role that advisers and financial institutions must play over the coming months in order to get the economy back on its feet, the government this week announced that it would be suspending its reform agenda from the Royal Commission for another 6 months to allow the industry to focus on the very important task of supporting those in need.

So the reform agenda for the Royal Commission will roll on at some stage but right now this is a great opportunity for the industry to really prove its worth. As we look forward to getting through this crisis, the role of the advice industry will be much better appreciated by the public and will bring balance back to the debate about how it needs to be structured moving forward. It’ll also likely be a leaner and more efficient industry, better equipped and enabled through the forced move to technology during this crisis. 

So we are looking forward to an industry whose value is better understood; more focused on providing clear value; one that is getting closer to its clients; and underpinned by innovation and technology. That sounds like a good outcome to me.

Written by myprosperity Director Chris Ridd

Usually in non-COVID times you’d find Melanie coaching and educating advisers across the realms of taking their business online with authenticity and genuineness, but the current times have urged her to focus her attention back to home, as her local community feels the direct impacts of the COVID-19 market shock. Situated in the beautiful Hunter Valley, Mel’s local community of Maitland has suffered from the lockdown conditions with local businesses closing due to a huge lack of foot traffic. 

Given the situation in her community Mel felt that the most helpful thing she could do in this time was to extend her advice to those around her. She partnered up with the Maitland Business Chamber to do a series called the ‘Small Business Bouncing Back’ webinars, focusing on getting local people together to stimulate their local economy by buying and shopping entirely locally. “Unfortunately we’re going to see a lot of small businesses who will struggle to recover, so more than anything if your local shops need support then that’s the most important thing you can do. If everyone does one of those little things then as a collective we can keep moving.”

Local advisers around Mel are working extremely hard right now, with some working 7-days a week just to service their existing clients. She feels that this is a golden time for financial planners and accountants to work with their clients to really show them the value in going digital. “For managing finances, accounting software is an absolute must obviously in this climate. Some people still don’t realise the power of platforms like Xero or myprosperity. Without these platforms it’s almost like operating with a blindfold on.”

With all this craziness going on, Mel’s been finding walks and yoga to be a saviour in her life. “It’s important to get outside and just remember that the world isn’t collapsing, this will pass, take the time to be present, look after your mind, and just be happy.”

You can view the full episode here.

1. Low-interest rates are here for the long haul. It’s likely the RBA will keep the cash rate low for a while to come with no improvement expected in inflation or labour market conditions expected for some time, Mortgage Business reports. 

2. More JobKeeper clarification. Deborah Jenkins, ATO deputy commissioner, confirmed in a My Business webcast this week that businesses that met the JobKeeper eligibility criteria upon their enrolment will continue to receive the $1,500 wage subsidy per fortnight even if they experience a boost in revenue in subsequent months. More here. 

3. You know what they say about playing with fire? ASIC has reported a surge in the number of new retail investors entering the market, signalled by the rate of creation for new accounts, which shot up by 3.4 times over March and April. Volatile conditions are making for dangerous conditions: “Even market professionals find it hard to ‘time’ the market in a turbulent environment, and the risk of significant losses is a regular challenge,” ASIC said. More here. 

4. How is this going to play out? CMC Market’s Michael McCarthy has scoped out 4 possible scenarios we could see as we emerge from COVID-19. The full article is over on the AFR but the low down is a V-Shaped recovery, better in 2021, recession now or reinfection and depression. The V is the most optimistic and probably most unlikely – what we absolutely want to avoid is reinfection and deep depression so keep social distancing and we can all do our bit to get out of this. 

5. Early super withdrawals near $10bn. More than 1.2 million Australians have sought to withdraw super funds early, news which comes as the AFP investigates more than 100 cases where users have had details on their applications accessed while others have had their super accounts accessed. A timely reminder to update your passwords and get up-to-speed with phishing tactics to protect your personal information. More here.

After spending nearly two months in lockdown, we’re finally beginning to see the curve flatten. State Governments are starting to lift some restrictions and conversations are turning to how we’re going to reboot the economy.

Some of the transformations that have happened during COVID-19 will be very hard to unpick – we’re looking at sectors that will forever be changed as a result of the past two months. Take the advisory sector,  we’ve been talking about how technology will transform the industry for the better part of a decade but the uptick didn’t actually happen until literally overnight when face-to-face interactions were wound back. 

Through these trying times, technology has afforded accountants and financial planners the tools to not only continue to run their businesses but to also diversify their offerings. Key processes such as onboarding, document signing, fact finds, tax checklists, and many more have been digitised so much so that advisers now don’t need to worry about leaving the house to work with clients. 

The need for this technology was recently highlighted in a Startup Daily article which shone a light on the myprosperity wealth portal and the uptick in usage we’ve been experiencing for the past few months. The article focuses also on why advisers are finding themselves in need of this technology now more than ever. With high levels of unemployment and economic uncertainty, people are turning to their adviser for crucial guidance and peace-of-mind during this time. 

“We’ve seen a spike in interest from advisers looking for a platform to help older people get their affairs in order and younger people worried about their financial future, especially with uncertainty around job security,” myprosperity Founder Peter McCarthy said.

Peter also highlighted the concern felt by people around debt levels and their ability to make repayments.

“For households, we’ve seen a significant spike in requests around assistance in financial management, retirement and estate planning, highlighting the increase in concern around financial health. These troubling times suggest people are looking for advice to help stem the loss and shore up their financial future,” he said.

With so many Australians in need of assistance, there’s never been a more important time for advisers to be utilising technology to ensure business continuity and remain relevant in the post-COVID world.

When Caren isn’t meeting the likes of Mel Gibson, Vanilla Ice and Charlie Sheen, she’s busy managing 19 staff at The Hendrie Group, the Croydon based advisory business she founded. She recently sat down to chat with myprosperity Director Chris Ridd to discuss how she and her advisory business have been coping during these challenging times. 

When asked how her clients have been feeling amid the market shock of COVID-19, Caren explained that people are stressed and confused. The Government stimulus packages have been a saviour for people, but she admits that some clients have been confused by the details of what relief they would be able to access. She’s found strong value in helping guide clients through these applications, particularly now that there’s been a influx of JobKeeper applications. Working with clients through these steps has been made easy through the use of digital platforms that have made client engagement simple in remote working conditions.

Caren believes that “the way we lead our clients through this is going to be everything” and that this is an amazing opportunity for businesses to redefine how they work with clients. One way that The Hendrie Group has been doing this is by using the technology they’ve had at hand more effectively, which has led them to utilising the myprosperity wealth portal. Caren has the highest regard for the portal and the tools it gives her to work more effectively with her clients such as tax checklist, reminders and document signing. “We feel it’s the most high quality wealth management product that can be used.” she explains. “You can get so caught up in a wirl-wind that distracts you from giving this technology the time it needs, but what better time is there for people to get their financial affairs sorted than now, and that can be completely achieved through the wealth portal.”

Similar to Caren’s love for the wealth portal, she has three non-negotiable health practises that get her through any challenging time. The first one is treating food like fuel, not comfort, making sure everything that goes in inspires rather than tires. Secondly, making sure she’s moving around everyday and thirdly, quality sleep. With her three mantras, a strong team and technology helping her work with clients, Caren believes that while this time is hard on many people, we’ve seen challenging times like this that we’ve persevered through and it can be done again. 

You can view the full episode here.