NSP Bucks the superannuation trend

There has been a lot of talk about how financial planners can exploit the opportunities opening up in the changing world of superannuation. NSP Buck is one group actually walking the talk.

There has been a lot of talk about how financial planners can exploit the opportunities opening up in the changing world of superannuation. NSP Buck is one group actually walking the talk.

NSP Buck Financial Services are the new kids on the block — having only been formed in May this year. The forces behind the merger that made the company, however, go back a lot further.

The four organisations that got together are Buck Consultants, NSP Lewis, Allied Corporate Superannuation and Queensland-based Manarah.

NSP Lewis was already on the expansion trail last year when it bought the superannuation consulting arm of Jacques Martin off Colonial.

Superannuation is the lynchpin behind the new financial planning operation which is a group of like-minded organisations getting together, says NSP Buck Financial services managing director Ian Martin.

This has meant some areas of the business produce more financial planning referrals than others. Consulting to superannuation funds provides NSP Buck with a considerable potential audience for financial planning services. Martin says the company has access to about 500,000 superannuation members requiring varying degrees of service and advice.

“We are providing the individual with financial planning advice if they want it,” he says.

With such a diverse client base, NSP Lewis is looking at packaging advice to suit the varying needs of the members.

This packaging sees one type of advice aimed at the 18-25 year olds that would reflect largely on debt management and a little on investment strategy. The older groups would focus in investment strategy and how to boost retirement income, rather than advice on home loans and credit cards.

With the younger groups, the financial planning advice is more a matter of education, says NSP Buck financial services manager Steven Browning.

“There is a line where a client steps over from education to financial planning advice, but we let the member make that decision rather than be pressurised by us,” he says.

“The education might start with simple financial advice and move to a fuller session, tackling more advanced subjects, but the final decision about seeking individual advice is with the member.”

Education and advice are not just limited to the members of a fund, they can be given to the company which owns the fund.

“I know some planning groups aim for what they call the high-net-value individuals, but I don’t know what that is or who they are,” Martin says.

He argues that people’s circumstances change and that alters their need for advice. He cites a recent example of somebody on a salary of about $25,000 with the statutory amount of superannuation suddenly inheriting $600,000. Suddenly that member became a serious user of financial advice, Martin says, yet how do you put that change of circumstance into a particular category?

The more important skill in those situations is building the relationship with the member from early in their life and creating a degree of trust between the adviser and member.

“Developing the relationship with a future financial planning client starts with helping them at the start of their financial journey,” Martin says.

NSP Buck charges a fee for service when financial advice is requested. Fees are later rebated to clients.

“We base our business on the objectivity of the advice and therefore fees from managers are rebated to the client,” he says.

“We are not there to sell to the client, but to educate them into making the right decisions for their financial future.”

Martin believes if the company provides the right sort of education, members naturally gravitate towards NSP Buck when they want financial advice.

If a fund felt the company was just there to sell products, Martin admits, they would soon be shown the door.

He says this is important when the company will be dealing with members from their first day in a job up to their retirement. The quality of education and advice is important throughout that long-term relationship, he says.

The other motive for talking to members at a younger age is to create a long-term client base.

Browning admits most of those members seeking financial planning advice are in their forties and above.

“A lot of planners rely on that end of the market for their business, but the opportunities in the future will come from the people just starting to go through the lifecycle and wanting financial advice at an earlier age,” he says.

“Initially we become a reference point for these younger people where they know they can get objective advice and not just be put into a branded product.”

Martin says the independence of the company is very important as it has no commercial links to any fund manager. It also strengthens NSP Buck’s standing with the funds, which are looking for objective advice and education for their members.

The company’s role in providing both education and financial advice has created a spin-off which is providing benefits to NSP Buck.

“Recruitment of good financial planners is very difficult and as the financial planning market changes, the planners available are not always of a good quality,” he says.

“We don’t have a big market to recruit from, so our education and advice process has enabled us to develop planners in house.”

NSP Buck works on a mentoring scheme where the new recruit is teamed with an experienced planner. They play a role in the education process, which enables them to build up confidence to work with clients on simple advice requirements.

“We can bring in young people, between 25-40, who are looking to work in the financial planning industry. We give them practical experience,” Martin says.

The mentoring process will last for two or three years and will take a trainee planner from scratch up to CFP standards.

“It is taking para-plannning the next step into making them planners and helps overcome the usual problem of how to find clients,” Martin says.

“This way the para-planner can get experience and start to build their own client base as they and the client wants more advice. It is all about the trainee planner getting hand-on experience with real clients.”

The training includes compliance issues and, Martin says, a strong emphasis on service.

“We are a service organisation and not a product-orientated one,” he says. “This is why compliance is so important as we cannot afford to make mistakes. We wouldn’t get any more referrals if we kept making mistakes.”

Martin believes Australia is four to five years behind the US on servicing clients. He says member education will play a major role for the company in the future.

NSP Lewis is looking at taking basic financial education to schools, citing teachers having a lack of experience to talk about a fast-changing market.

He believes students should be taught the basic of the financial system to give them a grounding to make choices when they join the workforce.

NSP Buck is also extending its service levels in the future. “We want to develop more sophisticated call centres that ask clients why they are looking for certain pieces of information and would they want advice to help them with decisions,” Martin says.

“We have call centres that handle administration inquiries, but they don’t take it further.”

Further developments include the creation of an on-line administration system that will look after all the client’s financial needs. Martin says a client want a system that automatically pays the house insurance while also providing daily unit reporting. This is more than a wrap service, says Martin, as it will cover a lot of areas that are not traditionally included. “We have had a request from a member to look after their frequent flyer points as well as the usual financial matters,” Martin says.

“We want to create a true financial management and administration system that will use the Internet as a means of communication with clients.”

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Advisers: 18

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