(2 December, 2004) Financial planners of the future

Tomorrow’s financial planners won’t take trail commissions — they’ll charge an upfront flat rate instead. And rather than just selling products, they will offer a much broader advice proposition. Most won’t be CFP qualified and hardly any will be technical services wizards, with tech savvy planners becoming about as available as those with web designing skills today.

These are the predictions of Strategic Consulting and Training managing director Jim Stackpool who says to continue making a crust, the next generation of planners will have to be talented customer managers rather than technical managers. But more importantly, he says planners will need to become ‘price makers’ rather than ‘price takers’.

“Price is going to be such a key weapon for product providers and manufacturers that an adviser today, if he or she thinks they’re going to earn the margin they earn on their trails in the future, is kidding themself,” Stackpool says.

Stackpool, who is speaking at this year’s FPAConvention, says that when fund managers continue to squeeze their fees, advisers will be left with two options. One will be to take margin reductions on the chin and increase the amount of product they sell to compensate.

But planners that go for quantity in tomorrow’s market won’t have time to supply their services, says Stackpool. He says planners are more likely to take the second option and go for quality, and that will mean offering a broader advice proposition.

It will also involve ‘making a price’ by charging an upfront flat rate to clients — rather than taking what the product manufacturers offer.

And that flat rate will not follow a fee-for-service model where an adviser charges the client a set fee every time they step into his or her office. Instead, clients will pay for everything the planner has to offer right at the start of the advice giving process, meaning they could be in for a pretty hefty bill — Stackpool estimates about $3,000.

But he says that clients won’t need too much convincing to foot the bill if their planner knows how to pull them in.

“You could tell a 45 or 40-year-old couple that charging an upfront rate will mean that for the price of one of their annual holidays they can pay you to do a strategy, and you’ll make sure they get annual holidays for the rest of their life.”

Coming back to what roles will be important, Stackpool says what he calls today’s ‘gold collar planner’ who can do a good technical job will be replaced by the ‘gold collar account manager’ who will possess good customer services and project management skills. Although they may have CFPs around them, these managers won’t necessarily be CFP qualified.

Stackpool says they will run clients like projects by firstly accessing what their client wants to achieve in what he calls a discovery meeting, then working out what success means to the client before finally endeavouring to ensure that success.

“Rather than saying, ‘Look you need an allocated pension that can do ABC, here’s the compliance, I hope you can get on’, planners of the future will need to make sure every touch they have with the client is reinforcing what their clients are trying to achieve before they start ramping out product.”

Jim Stackpool is presenting ‘How the Best Financial Planning Businesses in the World are Preparing for A Prosperous Future’ on Thursday December 2, at 10:55am-11:55am.