Broadening the scope of advice
The movementby real estate group Raine and Horne into financial planning as reported last week inMoney Management,is the most recent case of a non-traditional financial planning business seeking to establish an entry point into the financial planning industry.
Raine and Horne’s interest in the industry comes as no surprise given the intrinsic role relationship building plays in the provision of financial advice. It is this part of the business proposition between a client and adviser that holds most potential in terms of broadening out the service offering.
Financial planners are in a supreme position to influence the way people react and respond to the changing world around them. The fact that people actively seek out financial assistance reinforces their role as service provider.
And while there are other industries that are advice providers, it is arguable that there are few in as potentially a powerful situation as planners.
This is why it is conceivable in the future to imagine a time when this advice is not limited to financial planning. In there lies the seeds of a new industry which can either be one of promise or danger for traditional financial planning.
Yet as other non-traditional financial planning businesses are established, it increases the possibility for planners working in such businesses to diversify the base of their advice.
However, it is not a trend that is all about people moving into the financial planning space. As the industry becomes more sophisticated and there is a wider appreciation of the skill levels and challenges involved in it, planners will also move into other industries to perform niche roles.
The recent changes to the Family Law Act which means divorced couples can now split their super, could see financial planners moving into legal firms to primarily offer information on superannuation. Such a development may see planners providing a suite of financial planning services with legal advice just up the hall.
The opportunities are endless, with the only real barrier to such developments being the direction of industry regulation in the future.
At this stage, the toughest barrier to entry to the financial planning industry is the new licensing regime which attempts to standardise the education and skill standards of planners.
While new players entering into the market are expected to comply with the new standards from day one, the extension of non-traditional financial planning businesses into the industry means a greater reliance on alliance networks to ensure they are compliant.
And it is these alliances which again offer another entry point into the industry of the future, but its design and make-up will be dictated by those who see the road ahead and build the right advice vehicles to attract and keep clients.
AUTHOR
Jason Spits
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