Diversification not always the answer
Financial planning practices need to look into new ways of ring fencing their clients in the current economic environment, but diversification of services might not always be the answer.
According to Macquarie Practice Consulting associate director Fiona Mackenzie, diversifying could often be a costly process, with practice principals having to apply for multiple licences, and find and train new staff.
Instead, Mackenzie said creating referral partnerships with other specialists - such as risk advisers, accountants, mortgage brokers and legal professionals - is a good alternative to one-stop shop models, which many claim are making a comeback.
Aligning with other specialists helps financial advisers make sure all of their clients' needs have been met.
"There is much discussion in the industry about diversification, but if you have established a niche and do something well, keep doing it," Mackenzie said.
Establishing referral partnerships with other professionals in the industry was one of the quick ways advisers could adapt to ever-changing adviser needs.
Mackenzie's 10 tips for 2012 will be published in Money Management in print and online early next year.
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