US advisers to undergo Australian health check

AMERICAN fund manager Scudder Investments has signed up an Australian consulting group, Business Health, to provide practice management support to its US-based financial advisers.

Under the deal, Business Health will put advisers nominated by Scudder through its Business Health Check program — a program that requires advisers to complete an online survey used to pinpoint areas of weakness in their business practices.

Scudder has signed 1,000 independent advisers who promote its products to the service.

Scudder senior vice-president Linda Matza says the program will provide insights into the practice management procedures of advisers, and on where they need to improve.

“From a funds manager perspective, the survey information allows us to build practice development programs based on our advisers’ actual needs without having to second-guess what these might be,” she says.

Business Health principal Tony Stephens says practice management has only recently emerged as a hot topic in the US, with most American advisers a number of years behind their Australian counterparts.

Research conducted by Business Health found only 50 per cent of US advisers had a business plan in place, while four out of five had given no thought to succession planning.

“Our competitive environment has meant that Australian advisory firms have become relatively sophisticated in their business practices in recent years compared to their US counterparts,” Stephens says.

“In turn, the US market does not seem to be as advanced in the area of practice management, concentrating their services on the selling side of an adviser’s business at the expense of equally important issues such as business and succession planning.”

Stephens says the lack of focus on practice management among US advisers could create significant issues for fund managers going forward.

“A significant proportion of US advisers are now approaching retirement age, yet only one in five has a succession plan in place.

“Forward-thinking fund managers should be treating this issue very seriously because advisers provide the lynchpin in their distribution systems,” he says.

However, Stephens says the situation also presents opportunities for Australian groups looking to sell practice management expertise to the US market.

“We think we have a competitive advantage over there because we are a couple of years ahead of them.”