Profiting from choice

Will choice offer you the opportunity to generate more business? That kind of depends. Various reports have suggested few members, perhaps around 10 per cent, are likely to switch funds. For those who do, only those with a significant amount of super savings are to consider calling on advisers.

The most obvious of these are clients who have never seen a financial planner and who are now alerted to the very existence of their superannuation when choice kicks in on July 1 — or perhaps later down the track if they change jobs.

To capitalise on these new potential clients, advisers could target employer-sponsored superannuation schemes, especially the ones laden with high-net-worth clients who haven’t received advice before.

Many members of industry funds also haven’t received any financial advice, so they could be a good target market, especially those with enough money to set up a self-managed super fund (SMSF).

However, Tamworth-based planner Ray Griffin warns advisers against changing their marketing strategy to focus too much on choice.

“I think you need to be very cautious about tilting your business direction towards choice of superannuation fund because there will be a sunset clause on it,” Griffin says.

“Once all the media attention subsides and people settle down, they may well decide to stay with the fund they’re in.

“I think it’s a case of financial planners sticking to their knitting quite frankly,” he adds.

Choice of fund could also threaten your business. There might be clients who, dissatisfied with their investment returns, ditch their planner and go to someone else. To prevent this, the best strategy for planners is to stay in contact with clients, even if it means just picking up the phone and calling them. If you’re not keeping in touch with clients then they will have less reason to stay with the fund they’re in.

Many believe the biggest threat to advisers’ business will come from SMSFs.

Consider this scenario. A client walks into an accountant’s office in June to do their tax return. The accountant sees they have a high super balance and recommends an SMSF. Then the accountant recommends a financial planner — but not you.

Groups like the Financial Planning Association and the heads of the major dealer groups have cited SMSFs as the biggest threat to corporate, industry and retail funds.

For advisers, it could make sense to start honing their knowledge of SMSFs lest they lose their client to a rival name-dropped by their accountant.

And as mentioned above, a good knowledge of SMFS could help advisers target high-net-worth members of industry funds, small employer sponsored funds and retail funds.

However, whatever strategy advisers adopt to profit from choice, they will have to be careful. Advisers must be able to prove they have their client’s interests in mind.

The corporate regulator will be doing the rounds over the coming months, announcing last week that it is launching a new shadow shopper campaign.

Churners beware.