The importance of being ‘on the front foot’

As a part of its new series, Money Management speaks to financial planning groups and asks them to share their views on the industry in a new environment. This month, MM interviewed Keith Cullen, managing director of Wealth Today.

MM: How is the current situation affecting financial planners?

The move to working from home has been pretty seamless for a lot of them as most have had years of working at least a part of their time, if not most of it, from home or on the road in other cases. However, the greatest impact we are seeing is massively increased workload due to the emotional and financial stresses that their clients are under.

We have financial advisers all over the country who have all been put under enormous pressure over the past few weeks. And it’s increasing every day – for them personally in their own businesses and lives – but also they each have around 150 clients/families whose financial affairs they manage, many of whom have lost their jobs; or seen their self-funded retirement plans they have been working towards derailed; or if they are retired, seen their capital disappearing. We are very close with our advisers and we are here to support them – so we are acutely aware of the strain this is placing on them – it’s a stressful time for all. 

MM: Does that mean that you see an increased demand from clients wanting to re-evaluate their portfolios?

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This really depends on the types of client our individual advisers have, in terms of life stage in particular. There is a natural reaction from many to want to rotate to cash and how the adviser deals with that is very specific. Similarly, we had a number of advisers talking about clients wanting to try to “pick the bottom of the market”. Regardless of what the advisers ultimate counsel is, which again is very client specific, the workload in communicating and counselling is significant in these times. We have been helping our advisers with video link updates and workshops and publishing lots of material, factsheets and tip sheets for them to share with their clients. Regular communication and being on the front foot to contact clients is key in times like this. 

MM: Is your business tech-ready for an event like that?

Our advisers are all tech-ready as they are already used to working remotely. It has been a little more challenging from a process perspective to bring it together as we are a tight group of 25 people who are used to working very quickly with a very flat management structure. But so far it has been working well, with about half the staff working from home now. 

MM: How do you think the business model across the industry will evolve and which ones will struggle?

I think any adviser that does not recognise the need to constantly upskill and broaden their knowledge base and really engage with their clients regardless of how they are charging or where their fees are coming from will struggle.

From my observations, the industry has really struggled with charging clients and I guess that was borne out of history as a lot of the fees previously coming off what I call the sell-side, coming from the product manufacturer rather than from the client, so there was no need to really focus on what their time was worth and how they should be charging their clients. My general observation in the industry is that most advisers are short-selling themselves on the professional fee basis and the ones who will succeed are the ones that continually upskill and make sure they price their services appropriately. Advisers need to get more comfortable with it and not be afraid to ask for a reasonable reward for their time. 

I think those ones who are now focused on low-value clients who are unwilling to pay fees are the ones that will struggle in the future. On the other hand, the ones that are focused on the right level of engagement with the clients, who deal with clients who understand the value they add and who are prepared to pay for it will be the ones who will succeed.

MM: What are your views on self-licensing?

I understand the attraction of it but I think any advisers looking at self-licensing need to ask themselves an important set of questions. The number one question is what is the best value you can get out of dealer group? When you recognise what you don’t know and when you are engaged with a dealer group this means you are engaged with the most professionally-experienced people, which includes both the other advisers in the group and the management within the group. Then you can constantly improve your skills and upskill your broader knowledge base.

I understand the appeal of that, particularly for people who have had a hard time at the dealer group they have been with, and I can understand that then [advisers] have been passionate about wanting the independence of the self-licensing but I think when you stand back and look at the value you can get out of right sort of dealer group it’s probably not the best approach.

MM: What is your business' strength?

We are growing at what we think is a measured pace to make sure that we are on-boarding the right types of advisers and that we have the right cultural fit with our business. 

When we are looking at the services we offer, we want to make sure we are not growing too quickly because we are really focused on the level of service that we provide to advisers.

What is more important to us is we are looking at the attitude of the adviser and for those advisers who understand that it’s a new world we are living in and want to be really engaged with their licensees and get the real value out of the relationship with their licensee.