Consumer preferences are the main driving force behind advice changes over the next 12 months, according to NAB Wealth Advice Partnerships general manager Peter Smith.
Clients want to engage differently, and an adviser’s role will have to reflect the extra tools available to consumers.
“There’s a bit of a fork in the road emerging,” Smith said. “If I look at how consumers want to deal with financial services professionals, they either want really deep relationships or they’re going down a path of using digital capabilities to effectively sort their own affairs out.”
Delving into this further, Smith says that advisers can also play the role of the GP, or go narrow and deep into certain areas.
“We talk about the personal CFO model, where the client engages with the adviser and the adviser positions themselves as the person that co-ordinates the financial life of the client and they’ll call in specialists, they’ll call in surgeons if you like.”
Whatever model advisers choose, they need to be confident in charging their clients appropriately.
“Advisers need to be confident in going out there and charging for their services the way that a lawyer or accountant or any other profession would charge for their services,” Smith said. This includes a completely transparent pricing model, and clear articulation of the value they’re putting on the table, the cost of providing that value, and what the experience is going to be like for the client.
Smith’s main concern, like many others in the industry, is the rise of property within SMSFs, and gearing within that space that is being promoted by people operating under a standard AFSL-type regime, such as property developers.
While he says most self-managed funds are appropriate and hold suitable assets within them, there is a risk that the whole structure could be tarnished if a pocket of that space goes bad.
From a business point of view, succession is a big challenge for the industry. Smith says that succession planning hasn’t been a strong point for many advice firms, particularly small businesses.
Having a plan as to how equity will be passed on within the firm is a starting point, says Smith. Identify who the successors will be – whether that requires recruiting key people or working with an incumbent employee within the firm. And ensure you have all the tools in place to facilitate the transfer of equity.
Do you agree that these are the key challenges for advisers, or are you facing other issues?