Adversity brings Opportunity

Adversity brings opportunity and there’s never been a more exciting time to be a Financial Planner in Australia to build and grow a Financial Planning business, not detracted by, BUT enhanced by on-going disruption and change.

Yes one could perceive the reputation of advice has taken a beating lately, but markets have short memories, and in the main they forgive and forget. The Financial Planning industry is re-shaping and set to emerge as a professional recognised important market sector.

Opportunity is everywhere with the market re-aligning for growth and the next cycle of development. We look at a few vehicles of disruption and three key changes driving evolution and how you can take advantage of these in your business.

Market expansion and the end of consolidation.

The GFC brought about the largest consolidation of the advice industry due to numerous factors. Since then FOFA, the Royal Commission and the ACCC have all combined to limit any further consolidation from the big 5, in fact we’ll probably see significant divestment. We are now witnessing the largest expansion in the Australian Financial Planning market since the cyclical catalyst of the SG introduction in 1992. In this current expansion cycle there are new advice and Licensee offerings on mass, with extensive private equity involvement and international investment.

Broad generalisations aside, this move away from the big ships and mass vertical marketing means Financial Planners today have more options than ever before, and that’s great news. Not only do Advisors have more options than ever with Licensee partners, but this evolution of Licensee offers has re-shaped traditional offers. The Licensee of the future will be more technology enabling and streamlined.

The opportunity for Financial Advice Practices is choice and a move away from the big players product “influence”.

Practice owners have never had more industry aligned service providers, technology enablers, resources and choice on how they shape their business and advice offering.

Impacts of FASEA

FASEA is starting to bite and will see the biggest shake out the industry has ever seen. We sympathise with those at the back-end of their careers, although remaining involved at an equity or board of advice level to mentor the next generation represents significant opportunity.

The first deadline in January 2019 will see Accountants relinquish grandfathering of prior education and will have to start afresh if they wish to have a limited authority to provide advice. The second big kicker comes in January 2024 when all Advisers must meet minimum education standards and will be bound by a code of ethics.

The perceived adversity bring opportunity and this is good news for Financial Planners looking to build a business over the next 10 years, and those already in business with time to take advantage. As the deadlines tick down we’re sure to witness a rush to the exists for retiring Advisors, estimates vary on the extent. We may see a flooding of the market with sellers, but one thing is for sure, it will be a buyers’ market.

This once off event in the market will provide buyers the greatest access in history to purchase an existing business or book of clients.

The opportunity is to be capacity ready in your practice to move quickly on acquisitions as market conditions change.

Note: This disruptor has already seen a response by the Licensees and many businesses have already started to expand quite rapidly under favourable terms with their existing Licensee to acquire other assets within the group. We have already witnessed numerous metropolitan practices expand into national businesses over the past few years

Removal of the Accountants exemption.

Combined with FASEA this has brought about a very quick cessation of Accountants ability to provide Financial Advice to their clients, in the scheme of things this has been abrupt. Long held as the custodians of a client’s wealth the Accountants have been either ambivalent or didn’t understand the legal ramifications of being captured under the Corporations Act 2001.

The result is there are now tens of thousands of Australians not receiving any advice on their wealth and retirement savings, many of these having non-advised SMSF’s established by Accountants.

Anecdotally we understand the Accountants aware of the law are:

• not providing advice to these clients not recommending they seek advice
• don’t see value in advice - a service many have provided to clients for free, unregulated
• many Accountants underestimate the detriment to clients of not receiving any advice

The constant changing landscape of legislation regarding SMSF contributions, updating trust deeds, binding nominations, reviewing insurance and estate planning are just a few areas clients will benefit from your advice.

Notwithstanding the view of Accountants, again this disruption and adversity brings opportunity for Financial Planners to assist accountants manage these relationships and maintain good client relations. We examine a starting point with 5 Tips for Success working with Accountants

We have not set out to review ALL the changes here, simply identify a few areas of opportunity for Financial planners seeking to grow and develop their business. A review of industry changes over the past five years, let alone twenty-five years since the introduction of SG would require a book in itself.

In summary:

Market expansion, FASEA and Accountant disruption are three areas offering great opportunities in isolation, in combination they represent the single greatest opportunity for new and growing businesses the Financial Planning industry has seen.

The adveristy brings opportunity for those taking the long view, and as a professional Financial Planner these are exciting times.

About the Author: Dugald Braithwaite

20 years’ experience consulting to the Wealth Management and Financial Planning Licensee and Practice (IFA) sectors. A keen sportsman and coach in cricket, rugby union (ARU Level 2) and currently Bowls Australia accredited coach – yes marbles for adults. Represented NSW sub-district Rugby Union and Balmain Tigers Rugby League Club.

For those managing advice businesses you may also be interested in further articles and resources.

Are you considering growing the practice but haven’t the best path to take yet. In another related article we examine a few employment options to help you decide the best direction, and grow your financial planning practice. Grow your Financial Planning practice

A great way of driving behaviours in your practice is with a balanced scorecard incorporating Key Performance Indicators. Want to know, we have an article - Are KPI’s useful and how should you use them in your practice?

If you need a Position Description for Financial Planning follow the link to this page – IFA Recruitment

Download the PDF template to review some suggested KPI’s for Financial Planners.

Key Performance Indicators - Financial Planner - PDF