Changing strategies to meet evolving needs

The financial planning industry has undergone some momentous changes in the last few years and it’s critical the planners respond to the changing environment at the same pace, writes Michael Guggenheimer. 

There’s no doubt the financial advice industry is in a state of flux. We are all dealing with a business and social environment where there is uncertainty about economic conditions, the direction of future financial regulation, the changing dynamics from the rapid rise of digital technologies and an ageing population. 

Thriving in this environment requires us to rethink the way we work as an industry, the way in which we approach and service our clients, and the system in which we operate.  

While the changing landscape offers challenges the industry as a whole needs to continue to address, there are also opportunities to look at new ways to offer clients the advice that best suits their needs.  

Changing landscape 

According to a survey by the Financial Planning Association, of the less than three in five Australians who do not currently receive advice, only 16 per cent are considering seeking it over the next 12 months.   

Clients are increasingly facing more complexity, and in turn are demanding more convenience, control and value from their relationships with their financial advisers. They want easy access to their money, to track and manage their finances online, digital and mobile channels for when they’re on the move, to feel in control of their investments, and most importantly to know they are receiving the right financial guidance.  

These changing client demands have brought the need for client centricity to the fore, and it is now more important than ever to take the time to understand our clients’ needs and provide the product or solution that is right for them, while remaining transparent in our approach.  

Advisers as well are looking to evolve within the new environment. Our internal research shows advisers want to find more ways to connect with their clients, and offer more than 'just financial advice’ in helping clients achieve their goals.  

Using technology to increase efficiency 

Technology is under-utilised and is an obvious way to realise efficiencies and improve the client experience, in particular with Statements of Advice (SOA). 

According to Investment Trends, 62 per cent of people want a three page statement of advice, but the current average is 30 pages and over. In addition, internal AMP research found a number of licensees reported needing to meet multiple times with clients (in some cases up to six times) to gather information.  

While compliance issues are a crucial consideration, delivering SOAs that are as engaging as possible and truly reflect the customer’s goals will ensure the advice that is provided has context within a client’s wider financial situation.  

This will require targeted investment in new capabilities and solutions to maintain relevance and accessibility for clients. 

Making use of technologies can address this area such as apps and websites that deliver efficiency and do much of the preliminary work. This could be information that can be sourced online early in the decision-making process, helping clients simulate results in detail before they meet face to face with an adviser. 

Using technology in this way enables advisers to focus on face to face conversations, building rapport and a deep understanding of clients’ needs in fewer interactions, with more time to educate clients and taking some of the complexity out of the current advice process. This also translates to being able to deliver different and better advice experiences to clients at less cost. 

Shaping advice to fit client needs  

It is clear that when it comes to financial advice one size does not fit all. 

An ageing population, greater financial literacy and the growing take-up of self-managed super funds have meant that the industry as a whole needs to address how we approach finding the right solutions for the increasingly diverse client base - ranging from sophisticated investors through to those just wanting simple advice, such as around cashflow management.  

Clients are also increasingly time poor, which means offering a flexible and efficient advice process for clients to engage with advisers will become necessary.  

It is also true that some clients do not consider themselves ready for a complete financial plan, and much like in a doctor-patient situation, can take time to grow into a full ongoing relationship with a financial adviser.  

Sometimes clients are simply reacting to life events such as the death of a spouse or the loss of a job, and rather than trying to make clients fit into the traditional holistic advice model, our advice approach needs to be able to cover just that event in the first instance.  

It is therefore inevitable that advice will become more specifically objective-based, helping clients understand their financial needs in terms of a single defined goal, such as children’s education or an annual holiday. This brings advice to life for people and focuses their strategic decisions on the concrete financial milestones they would like to achieve and the overall lifestyle they desire. This is also a great way for clients to experience firsthand the value of advice which may then lead to a more extensive financial plan. 

While keeping the face to face advice model as the pre-eminent advice solution, it is also important to supplement this with other avenues for advisers to add value, which could include over the phone or online interactions to meet the advice and product needs of our clients.  

Communicating the value of advice 

Most importantly we as an industry need to communicate the importance of financial advice. Our advisers help coach customers through the various changes they will face in their lives and help them make big life decisions. They also help turn the best laid plans into action. 

The easier we make it for clients to interact with the industry the more likely they will seek out advice, which as we know will help secure their financial future.  

Ultimately, questioning and rethinking the fundamental way we approach our clients and the ways in which we offer advice will ensure that our industry continues to adapt to this shifting environment.  

Michael Guggenheimer is managing director at Hillross & AMPFP.