CUTTING EDGE -- Essential evolution

In the future, advisers will work as a team focused on delivering the advice needs of the client.

By: David Fox
Principal
Advice Centre Consulting

We have seen many changes in the role of the adviser and in the structure, operation and service delivery of advice businesses over the last twenty years. But these changes will be looked on as only minor when we compare the typical adviser of today with the adviser of the successful or dominating firm of the future.

Up until a few years ago the typical ‘financial adviser' - including mortgage brokers, insurance specialists and financial planners - were self-employed sales people who often confused their job with a business.

Those who experienced some success in this role began employing some help - often someone who could assist them with the administrative duties that came with the job. The advisers' focus was on selling a client or potential client a product and normally they were compensated for this by the product manufacturer.

They were responsible for everything that contributed to making the sale and the after sales service - sourcing the potential client, converting the client, providing the required documentation, managing the client relationship, delivering peripheral components of service and managing the personnel they may have employed to execute some of the client and business administrative tasks.

In the successful advice business of more recent years it is common for the firm to employ a number of professionals but the business owner and senior adviser still has multiple responsibilities that include chief executive officer, general manager, marketing manager, human resources manager as well as client adviser. Advisers who do not have ownership in the typical business today are mostly more junior in age and experience but still have responsibility for sourcing new business and often for managing other roles such as junior advisers and/or para planners.

The advice focus of the typical adviser of today is limited to the advice capabilities of the business and is often biased towards credit or lending advice, financial planning or protection and risk advice. The adviser typically delivers the advice to the client with a recommendation to see another specialist regarding components of advice the business is not capable of delivering (such as tax planning, insurance advice and estate planning).

MOVING FORWARD

In the most successful advice businesses evolving over the next three to five years (at Advice Centre Consulting we label these businesses dominators) there will be a number of adviser roles, each with clear accountabilities and advice specialties.

The three accountability areas will be for conversion of potential clients to clients, the retention of existing clients and support for the more senior advisers in the execution of their role.

Typically the most senior and experienced advisers will fill the first role, the next in experience the second role and the developing professional the third. They will have varied titles with principal consultant, senior adviser and associate adviser being one set of options.

These adviser positions will have some responsibility for identifying new potential clients for the business; however accountability for this function will reside with a dedicated marketing team or position. The advisers will work as a team focused on delivering to the priority advice needs of the client.

Each of these advisers will also have an advice speciality including lending and credit, retirement planning, tax planning, protection and risk, business improvement, wealth creation, legal and estate planning, property and asset ownership, philanthropy and aged care.

All specialists may not reside in the one firm - there may be specialist businesses that work together as ‘advice partners' with the common aim of delivering the appropriate advice to the client at a time when it is a priority for the client.

The adviser of tomorrow will dramatically shift their focus from advising according to the business' advice delivery capabilities to advising according to the priority needs of the client, including:

• Managing client wants and uncovering their needs
• Mortgage broking and financial planning
• Insurance broking and client advising
• Working in harmony with other professionals
• Being responsible for sourcing new clients and delivering value
• Converting and retaining clients

The advice business that resists the current unstoppable forces that are reshaping our industry and only tinkers with the change to the future adviser role will find it difficult to compete with those that will surely dominate our industry in 2013.