Digging deeper for productivity gains

In a market as tight as it has ever been for experienced planners a trend appears to be emerging among dealer groups to achieve growth through increasing productivity per planner.

Another apparent emerging trend is for groups to employ more entry-level planners, on the assumption that the skills shortage in the sector is unlikely to improve any time soon.

Both trends are been driven to some extent by the difficulties in a skills crisis of attempting to grow dealer groups by increasing adviser numbers to achieve scale in the market.

Some dealer group heads have embraced these trends in the belief that growing a dealer group by recruiting senior planners in the current market can only be achieved to the detriment of another dealer group.

ANZ Financial Planning(ANZFP) chief executive Mike Goodall said it’s an ongoing challenge to attract and keep planners in an “already very tight market that has significantly worsened” over the past year.

“I have long held the view that the financial planning models in banks will have to change in the long-term to reward planners in order to be able to grow their business,” he said.

In the more immediate term, ANZFP has decided to refocus its recruitment effort on internal rather than external candidates from later this year, to tap into a growing demand from within the bank.

“Between one-third and one-half of people who have joined us as planners (and paraplanners) during the past 12 months have come from within other areas of the bank,” Goodall said.

The group is also concentrating its efforts on employing “newer entrants to the planning business, because you get to grow your own rather than recirculating everybody else’s”.

“We’ve certainly seen that the tenure for newer people is longer than for planners who have been working elsewhere, and see ANZ as just another step in their planning career.”

ANZFP had “aspired to grow by 50 planners (for the 12 months to March 31) this year, but an additional 39 has ended up being the reality for that time period”, he said.

The increase brought ANZ’s total number of planners to 388 as at March 31 this year, up from 349 at the same date last year.

It put ANZ into 12th position on the list of fastest growing dealer groups this year, behind first-placed Professional Investment Services (PIS), which added 151 planners.

Guardianfp group head of advice network development Steve Browning said the group had deliberately rationalised planners in the past 18 months to “end up with a smaller number of more productive planners”.

“We’ve also made a distinctive effort to improve our advice quality over the period, and have assisted those planners who’ve struggled to come to grips with this to find other planner groups,” he said.

While the group (Guardianfp and CameronWalshe) shed 15 planners during 2007, reducing its total to 167, Browning said it plans to grow planner numbers from this year.

“I suspect the art form for us is to look beyond the standard pool of talent that’s out there (in a tight market) and find people who would potentially make suitable planners.

“We’ll provide the training and development for these people to get up to speed and to hopefully align either to existing practices or assist other planners to purchase businesses we might have for sale,” he said.

Financial Services Partners (FSP) chief executive Geoff Rimmer said the group had shed (35) planners during the year as part of a strategy to drive group profitability.

“We’ve reduced our numbers from the bottom 20 per cent of our businesses, as defined by their income and also their willingness to embrace the new drive for profitability,” he said.

“The impact of this drive is our profit has gone from $200,000 dollars to something approaching $3 million this year, and we’ve also had a year of record inflows, breaking the billion dollar barrier.

“At the same time, the average turnover in our business now is in excess of half a million per firm — and we are now only recruiting firms to the group that can accommodate that sort of profile.

“We’ve also introduced a mentoring service into most of the firms in our group in line with our new strategy of employing mainly young people, those starting out in their careers as planners.”

Charter & AXA Financial Planning national manager Paul Williams said the dealer group’s reduction in planner numbers (-59) was consistent with its strategy to “focus on adviser quality, not quantity”.

“Consistent with the industry, consumer and regulatory move to quality financial advice, our strategy over the past six years has been to focus on employing quality planners.

“At the same time, we have focused on helping planners to grow their earnings and business value, which has, in fact, been an incredibly successful strategy for both AXA and its advisers.”

According to external research, Williams said average adviser revenues across the AXA Financial Advice Network grew at more than double the average industry rate over the previous 12 months.

“In the process, we’ve built an enviable compliance record, staying away from ‘problematic’ products and out of the headlines, which is reflected in our market-leading PI [professional indemntity] premiums.”