Moreover, we are seeing around 2,000 advisers exiting and an estimated 100,000 consumers to be left without an adviser. With the many challenges advisers are facing, how will they be able to thrive in the current financial services landscape?
Due to the pandemic, consumers are realising the importance of proper wealth management and securing a good financial position. This has led to an increase in confidence and demand for financial advice.
However, despite the growing trust in financial advice, the number of financial advisers is declining. Many registered advisers are considering leaving or retiring due to the strict implementation of education requirements. Moreover, changes in financial advice regulations are making the cost of advice more expensive and less accessible for a growing number of consumers.
With restricted access to affordable advice, people are turning to the less expensive alternative—robo-advice. Moreover, younger consumers prefer following free advice from “finfluencers” or social media influencers than seeking advice from a licenced financial planner.
Due to the rising cost of financial advice, consumers are turning to financial or wealth coaches who offer cheaper yet relevant guidance on wealth creation and money management.
Although licensed, robo-advisers provide limited advice and consumers may not get the information they need to make critical decisions. Also, while financial coaches offer a change of financial mindset and the skills to self-manage finances, they cannot make investment recommendations. Moreover, not all finfluencers are licensed to provide financial advice and may even put investors at risk.
Because of the changing landscape, financial advisers and licensed firms are facing two challenges. The first is how to continue providing accessible and affordable advice despite rising costs. The second is how to add more value to face-to-face advice to remain competitive.
Redefining their business model and advice approach might help advisers adapt to evolve their financial planning business. Here are five tips you may want to consider, so you can thrive in the changing financial services space.
When giving advice, you must always have your client’s best interests in mind. However, changes in the economy also impact the circumstances of consumers, including their financial objectives. Hence, the information they provide may also change as they move forward in their financial journey.
Taking the time to gather all the information about each client can help uncover crucial details about their situation. Consider sending the financial questionnaire before the scheduled initial interview to give them time to really think about their financial goals. Then, during the initial meeting, ask more detailed questions about their answers, whilst carefully observing their overall demeanour.
Next, personalise a communication style to make them comfortable talking about their needs—including emotional ones. Also, because their circumstances and financial needs could keep changing during the process, always document their responses. You must also religiously verify the information they provide and ask if they need further clarifications or questions.
Knowing your clients’ circumstance can also help you identify factors and potential risks that may impact their financial position. This will lead not only to knowing them better but also what they are willing to do to achieve their desired financial goals and objectives. Moreover, you can show your genuine concern over their best interests, whilst building their confidence to make the best decision.
There is no one-size-fits-all financial product and no two consumers with the same needs. Some are simple, while others require multiple solutions. The complexities of financial products and stricter adherence to Best Interests Duty are making researching and comparing choices even more difficult. A comprehensive assessment of each client can help you take a consultative approach to the product selection process.
Careful consideration of their individual facts, circumstances, preferences, and objectives enables you to articulate strategies and solutions better. Knowing where your clients are coming from will also allow you to communicate your considered strategies proactively. In doing so, you can educate and empower your clients to make more informed decisions about their finances. Thus, enabling them to consider solutions in their best interest, whilst adding value and addressing their short- to long-term goals.
Understanding that your clients have different goals and objectives also enables you to determine potential risks. Hence, you can easily adjust your recommendations to include relevant and helpful solutions. Moreover, you can identify better opportunities to address your clients’ more complex financial needs and offer holistic advice.
Because of the complicated nature of financial services and the uncertainty of the last two years, there is information advisers cannot provide easily. Unfortunately, some clients believe that advisers intentionally withhold information because the returns are unfavourable. Sadly, this creates distrust of financial advisers and lowers the confidence on advice.
A clear explanation of your recommendation and frequent communication can help give your clients the assurance they need about their finances. Let them know why you believe your recommendations will work towards achieving their financial goals. Also, articulate why their current options may not be as beneficial in the long-term and provide relevant information to support your reasoning.
Personal finances are always a sensitive topic, especially for consumers who have spent years saving up for a dream investment. Keeping your clients updated about their finances even when they are not asking for one reinforces confidence and builds trust. Regular communication with your clients also helps you find out significant changes in their lives that could impact their financial goals.
In this age of digital revolution, new and advanced technology is what separates a thriving business from a declining one. Cloud-based software can help you store and share documents securely while offering clients ease of access—even during disruptions. Online fact-find tools also enable clients to complete their risk profile and empower them to learn more about their financial position.
Leveraging technology also helps practices future-proof their business, while giving their advisers more time for client-facing opportunities. Online platforms and interactive mediums can be used for presenting advice without the need to physically meet with your client. A client portal can also share information about market trends and possible impacts on current financial products.
The right tool not only helps practices optimise processes and workflows, but also transforms client experience management. A customer relationship management (CRM) software can gather information about a client’s personal preference and help you create a personalised experience. Mobile applications and social media also enable you to communicate more proactively with your clients and nurture a deeper relationship.
We are seeing new Financial Planning platforms arrive with live fact finds and great data for the Adviser. Thus, enabling them to not only create efficiency but also take their clients on a journey that potentially leads to the next generation coming onboard.
For financial advisers, productivity is measured by how they spend their time. In general, more time on income-generating activities leads to greater revenue and valuation. Unfortunately, advisers still spend more time on general administration and plan preparation than client meetings. In addition, a lot of active registered advisers no longer have client-facing or advice dispensing roles.
Outsourcing the back-office helps advisers have more time for client meetings and improving client experience. Having an offshore dedicated staff or team allows you to focus on evaluating economic trends, setting financial policies, and identifying new offerings. Moreover, it enables you to develop more strategic plans for future business activities to scale your financial planning practice.
Outsourcing paraplanning and administration is a cost-effective way for advisers to increase efficiency and explore opportunities for long-term profitability. Moreover, it gives you the time you need to update your knowledge through continuing education or refresher courses. Staying on top of never-ending changes to regulations and compliance can also help you remain competitive in the demanding financial industry.
Value is something that clients should perceive as the core relationship with their Adviser.
The need for higher educational standards and meeting new regulatory requirements continue to impact the already escalating financial practice costs. Also, the adviser exodus and lack of new talent supply have left practices struggling with growth and profitability.
In addition, despite the increase in consumer trust and demand for licensed advice, affordable advice continues to decrease. Hence, consumers are left with no choice but to look for more affordable options to help them overcome their financial challenges.
DBA offers flexible financial support services options to help your practice in delivering affordable advice of the highest standard. Our team is composed of experienced paraplanners and administrators—majority of whom hold RG 146 certification.
We can complete your back office, client administration, paraplanning and compliance tasks, so you can focus on improving client experience. Also, our in-house Australian consultant with over 16 years of industry experience ensures each team member keeps abreast of regulatory requirements.
Our team also has the technical skills necessary to operate various software and applications to optimise your entire process. Moreover, we can help you save up to 60% of the cost of having an in-office employee. Hence, you can remain competitive and have more opportunities to thrive in the new Financial Services landscape.
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