Delivering advice for all

These days it is becoming harder to find dealer groups that are free from financial connections to institutions.

And the institutional dealer groups have become the major distribution channels for products.

However, despite the large promotional budgets of the big players in financial planning, the independent dealer groups continue to thrive and build client bases.

Of course, some independent groups have evolved out of the bigger institutional groups, as advisers seek to have more control over their destiny.

Attracting advisers is one area where the independent groups have to compete with the institutions.

Capstone Financial Planning managing director Grant O’Riley says advisers have to see a value proposition being offered by the boutique group to attract them.

“We have got a clear vision of what we are and where we want to go,” he says.

“And packaging all that up into an attractive offer for the adviser is what we focus on.”

Capstone has achieved steady growth in adviser numbers, and O’Riley says three more practices are in line to sign up with the group.

Attracting practices to the dealer group means offering a flexible approach to what the adviser wants. This includes choice of product, platform and software.

“The adviser doesn’t like being dictated to,” he says.

“We don’t have any bias towards a product or service and, for example, our independent research is delivered through Lonsec.”

O’Riley says advisers like to have a say in what products and platforms they use and what is most appropriate for them.

“It is a different approach to the institutions, and it was something I learnt we had to have in place when I launched Capstone,” he says.

“Every business is different and the dealer group should not dictate what software or platform the adviser should use when they join your group.”

However, whichever platform and software the adviser chooses, Capstone still approves all templates that are used as part of the compliance regime at the group.

Attracting any adviser to a boutique group is not the game plan either, as Matrix Planning Solutions managing director Allison Dummett explains.

“We have found our clients expect to deal with a talented adviser,” she says.

“To attract talented advisers you need to have the size and capacity to support them.”

Currently, Matrix has 35 practices and Dummett says the group wants to grow to 50 practices.

“The reason we want to remain small is that we are attractive to certain types of adviser,” she says.

Dummett says advisers attracted to small groups such as Matrix want to be a name rather than a number.

“Because we kept our support team small, the adviser knows who they are dealing with,” she says.

“Big institutions have big teams, such as compliance, where one size fits all.

“The adviser in a large institution can expect to be dealt with by teams of more than 30 people, and it is impersonal.”

Dummett says Matrix has 15 staff looking after 80 advisers, and it is running profitably.

“Advisers will get to know our procedures as we get to know them,” she says.

The dealer group offers its advisers choice of products, platforms and software.

For smaller dealer groups, this has become an almost standard package, as the adviser seeks choice in their supplier.

O’Riley says while his group gives advisers a choice of services and products, people inevitably gravitate to one or two services.

While there are plenty of advisers willing to leave the big institutions for smaller groups, they must have the right mindset to fit into the culture of a smaller group.

This is also true of the dealer group, which must develop a culture that will attract the type of adviser who wants to work outside an institutional group.

“There is an important need for the culture of a group to be right, and it has to be relationship focused,” O’Riley says.

“Engendering trust between the group and the adviser is a priority, and that leads to adviser loyalty.”

Capstone has only lost two advisers to other dealer groups in the past four years, something O’Riley says shows the group has the right culture in place.

“The value of the culture is very important to a group like Capstone,” he says.

“The trend is for the dealer group to be a business provider, and we subscribe to that model.”

Capstone will limit the number of advisers in the group to 100 to maintain the personal service levels to each adviser. O’Riley says this is to avoid people becoming a number.

Dummett says her group recruits advisers from the big institutions because, again, people want to be more than just a number.

“We find a lot of advisers want that relationship with people again,” she says.

Matrix also offers advisers the added attraction of equity in the group.

“We find new practices joining us bring in extra revenue, which increases the profitability of the group, and that benefits the existing shareholders,” she says.

“People joining us like the concept of owning part of the group and that attracts advisers to Matrix.”

O’Riley says Capstone has built its in-house support for advisers to create a relationship.

The in-house support includes professional development days that are without product bias, which enable the adviser and dealer group to concentrate on their relationship.

“Institutional professional development days are about product flogging,” he says.

“Our days have never been about product flogging and never will.

“Relationships are about service to the adviser, and from that comes providing the client with good advice.”

Securing clients is another area where the boutique dealer group has to work against the marketing power and brand of the large institutions.

O’Riley says his group has a solid brand. However, it does enjoy some benefits from the advertising campaigns the large institutions blitz the marketplace with.

“When institutions run multi-million dollar advertising campaigns, there is some leakage, which benefits us all,” he says.

“Most of our advisers have solid relationships with their clients, so big TV campaigns are not necessary.”

O’Riley says Capstone relies on referrals and its reputation. That reputation includes providing advice without bias.

“What we have done at Capstone is to have the best products at the disposal of the advisers,” he says.

“So the clients coming to us are the ones looking for non-biased advice.”

Dummett says offering advice that is different to what the institutions offer is another way the smaller dealer groups can win clients.

This also includes finding advisers who can think differently and offer advice targeted to particular client groups.

Matrix has developed a program to help clients pay off their mortgages, which in turn enables them to create wealth outside superannuation.

Called Prospera, the program includes a software management system that helps clients manage cash flow and, therefore, reduce debt.

“Prospera is a point of difference for us,” she says.

Matrix offers its advisers full support and training to use the program and, again, Dummett says this is creating a point of difference with the institutions.

“Institutions offer product, but with little support,” she says.

“We talk to advisers to deliver value, and that means there are lots of PowerPoint presentations to them and lots of phone hook-ups.

“We are investing in our people.”

Dummett says the key to providing good advice is not just offering a product, but providing a solution to the client’s particular needs.

“We see products given to advisers which they don’t understand and, therefore, they don’t use,” she says.

“This is why we take a lot of time explaining and helping our advisers to feel comfortable when using a particular product.”

Dummett says Matrix attracts most of its advice business through referrals, so the group is happy to co-brand with its advisers.

O’Riley says the days of a dealer group offering one type of service to its advisers and then expecting all the clients to want that product are gone.

“In the 90s, product was king, but I feel the time is coming when distribution will be king again,” he says.