What Does the Future of Financial Advice Look Like in Australia? | Episode 02

Welcome to The Future Financial Adviser, where we discuss the latest digital platforms, best practices, and evidence-based investing strategies, to give financial advisers the tools they need to help more investors improve their financial well-being.

Hi i’m nigel baker and you’re listening to the future financial advisor we’re running this podcast to create an avenue for advisors to share their thoughts and their best interests and really trying to attract those advisors who want to take the industry forward what we want is great businesses are really making a difference and really making a big impact to their

Clients and we want to know how they’re doing it so in this series we’re going to be discussing the latest digital platforms some best practices evidence-based investing strategies we want to give financial advisors the tools they need to help more investors improve their financial well-being so if you’re ready to take the industry forward modernize your advisory

Practice and reach a new generation of investors and the new generation of advisors then this show is for you so all our recordings and podcasts are general advice all the content all the people interviewing here it’s all their own opinions and all their own views in no way does it constitute any personal advice or recommendations if you need specific advice

Please go and seek an advisor thanks very much so welcome to this episode of the future financial advisor in this topic we’re talking about what the advice industry will look like in the future what will it look like in 2030 maybe 2025 is close enough for big changes and it’s it’s changing so much already so i entered this industry in around 2000 2001 i’m doing

My chart of accounting and actually jumped into a job initially with a little stop broker and then anz bank and a small little financial planning business and wow lots lots of different experiences there i learned from some great people saw some strange behavior never saw anything crook but certainly saw some culture that maybe uh led to some problems 20 years

Down the track and then actually jumped back into a charter accounting practice and became a partner there and as i’ve seen i’ve sort of seen different business models i’ve seen percentage you know commissions i’ve seen fixed fees i’ve seen fee for service i now have a you know my own the company’s music independent properly i suppose but privately owned practice

Or delete that word independent of course and i’ve been running that for 10 years you know any industry have left and many i’ve seen i’ve had two calls in the last few days of people wanting to sell their practices it’s been tough the last couple of years covert of course but the regulations have forced many out the educational requirements so where do we go with

That i mean if you’re in the industry and you honestly believe and i think there is some great opportunity then how do we build practices of the future that are much better much more robust you know we’re here to help people but how do we make sure those practices are really efficient and really successful so we can help more people because what we don’t want in

10 years is another sort of collapse and that’s not a great outcome for australians there’s approximately nine million australians who need advice give or take maybe a few more but let’s let’s call it around 9 million of an age group who do really need advice and the number of financial advisors in the country has gone from roughly 30 000 to it might be it might

Land at about 17 000 after all the changes those those advisors left are already pretty busy the ones i talk to are there’s not many who are saying they’re not busy there’s lots of work out there lots of people still needing advice and they they’re capped out so a good advisor might be able to really help you know maybe 100 clients but really you know in a deep

Way 20 30 40 50 uh depending on the sort of client they’re looking after of course some might be able to help more depending on the complexity a lot of advisers i talk to say look they love helping those complex clients but they do have a passion to help others people get referred to them who aren’t that complex or they might be family or friends or or someone and

They’re not just saying that hopefully one day that person earns a lot of money and they become a big client they actually have a genuine calling to help that person but as we all know the cost to serve as a client depending on where you are and your business model can range from a couple thousand dollars to 10 000 just to have a client on the books it’s uneconomic

You can’t just bring someone in the door and say look we’re going to help you and charge you 10 grand but they you know they don’t have the means to pay that so you need some ideas to say well how do we help those people using digital technology and how do we use the legislation to help service people under different models so here’s what i think i think i think

The industry will move forward and have different models where great advisory practice will have their complex clients and we all know how that works and you can still make that better a lot more efficient and i think those services are going to broaden and you’re going to be a real wealth manager in those in those areas not just the investment specialists which

Perhaps a lot were in the past or perhaps they thought they were much more a coordinator and a wealth manager of that client’s financial affairs in coordinating tax and estate matters and succession and yes the investments are important but it’s part of a piece and whether or not they charge fixed fees or percentage i don’t really mind as long as the client knows

In my experience clients don’t really matter this whole debate about fixed or percentage some people get their knickers or not so to speak about it what i’ve seen is that perhaps you want to ask clients what they would like and actually some clients have got no problem with percentage-based fees as long as they know what the fee is some prefer fixed i think you’ve

Got to be able to have a business where you can explain it properly and make sure it’s transparent you’re not getting any conflicts and as long as it’s transparent and it makes sense there’s nothing really wrong with a percentage model there’s plenty of great business out there who use percentage model i can tell you now there’s plenty of great businesses use fix

There’s some really bad businesses that use percentage because they use it the wrong way and there’s really bad businesses who use fix and are really unprofitable because they haven’t got the pricing right so fixed is really dangerous percentage is dangerous if you’re using it in the old way of like moral commission but if you’re using it as a way to represent your

Service and fees you know again this isn’t the time for that debate but let’s move away from that let’s talk about what a good advisers want to do in the future and how do they offer multiple services so you’ve got high-end complex clients we’ve got perhaps some not so complex clients but they still need your help you know they might need retirement advice they might

Just want to outsource their investment management they’re not overly complex but there’s a service there and and um and clients are willing to pay for that and there’s great client value there but then there’s the clients who perhaps don’t need a lot of advice but would like to touch base with a high quality advisor and how do we do that so in my view that’s where

Digital really comes in and digital will flow through practices but really we can use digital right now in the current legislation there’s nothing stopping you people get worried about some of the legislation there’s nothing stopping you offering limited services to certain types of clients as long as you swim between the lanes and you might need help in terms of

How to swim between the lanes and perhaps we can we can help you we’ve gone through this journey and i’d be interested in other thoughts but you either with those clients you either don’t help them or you refer them away and that’s not a great outcome for that client because that client goes well where do i go i go to a bank well they don’t offer financial advice

Anymore i go to online but i need i don’t want a robo and as an advisor maybe i don’t want the robo service because then i’d lose contact with that client and that could be the sound of the daughter or the nephew or niece of one of my great clients who said can you help out my niece and do you say no we can’t and they said well that’s why not you know that’s not

Great outcome and that that means for what we know in five years time inherits that money or whatever the case may be and then they they’ve drifted you’ve lost that contact so what we want to create is a service model that gives them contact gives us some great quality information and outcomes and as the advisory business you’re able to connect with them and and

Make sure that you’re for providing a great client experience at all levels but you don’t want to get bogged down there that they can’t take too much time can’t you they don’t want to be spending five hours they’re setting that client up so that’s got to be digital low touch but with access in the middle a bit more of a hybrid and obviously therefore you can spend

Most of your time as an advisor in front of clients seeing clients explaining strategies then you’re gonna have a great practice and if you’re charging correctly for that so that’s what i think i think the great advisory factors will morph and they’ll actually end up helping thousands of people but differently right now you’d say how can i help that a thousand

People of course you can if you’ve got different models and services and we’re using digital so that’s what we’re thinking i’d love to hear your thoughts the future of the advice industry is great there’s some great quality advice out there there’s some people really trying to make a difference and really might get trying to make a change there’s lots of leaving

And that’s that’s understandable but the ones left the ones that want to make a difference who really want to help people really want to make a big impact on people’s lives then there’s great opportunity really keen to hear your thoughts what does the future of the advice industry look like and what do you think it looks like reach out on linkedin or message us

And would um love to hear from you you’ve been listening to the future financial advisor so if you’ve been enjoying the show please make sure to share it with your network and leave a review on your favorite listing platform or if you’ve got some ideas or thoughts or would like to come on as a guest or know someone who would be a great guest then please let me

Know to learn more about cntm just go to our website cntm.com or look me up on linkedin look forward to speaking with you and see you on the next episode

Transcribed from video
What Does the Future of Financial Advice Look Like in Australia? | Episode 02 By Scientiam