The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has exposed a number of fundamental weaknesses in the Australian system. And for all of us who are working in it every day, it’s been a horrible time. As Professional Planner recently wrote: “What it must be like for its many honest employees and advisers doesn’t bear thinking about.” And while they were referring specifically to the AMP in their article, I think the same comment applies across the entire financial services industry.
And as the Commissioner, and eventually the Government, consider ‘where to from here’, the issue in front of every Australian adviser should be… what should I be doing now? It’s very tempting to delay (“I’ll wait until I know for certain what’s going to happen”) …but is this really practical? The flaws of the industry, real and perceived, have been well and truly exposed for all Australians (and their Government) to see.
Irrespective of the eventual outcome, it’s clear that we are set for a significant overhaul of how business is conducted. Certainly, what got us here won’t get us to where we need to be. So, against this backdrop, here are a few initiatives which I think should be considered by all financial advisers and their firms – now.
Firstly, personalized, relevant and frequent communication;
- Reach out to your clients who are reading the press, watching the news, receiving various soundbites – most of which is roundly criticising, and attacking, the financial institutions their adviser is associated with directly or by implication. Justified or not, advisers have been drawn in, with many clients now asking themselves – what about my adviser? Is she or he implicated? Have I been affected?
- Reassurance and reconfirmation of your offer are needed now more than ever – reassure and remind your clients what you are doing for them. Similarly for your staff. How are they feeling given the Commission revelations? Perhaps it’s time for an open and frank discussion with them. Maybe a team meeting over coffee and muffins is in order? Do you know how your referral partners and key centres of influence are viewing these proceedings? Is it time for a phone call to hear their views, gauge their attitude and reassure them of where you stand?
- Given that the ramifications of the Commission are set to play out over time, I think you’ll need to approach your overall communication in the same way. A single piece of communication, while helpful, most probably won’t cut it in the longer term. Consider constructing a communication program that delivers frequent reiteration of your value proposition, and the actions you’re taking to deliver it – over the longer term. Use various methods to get your message out there (written, phone, social media, your website and so on).
Secondly, it’s time to put on your ‘business owner’ hat; according to our database, 68% of all firms are single owner businesses. So, what should a prudent business owner be doing?
- For starters, I suggest monitoring the early warning signs. Are you receiving enquiries about the Commission’s findings? If so, do you have a process in place to handle them? How do your staff respond if they’re asked a question by a prospect or client? Have you noticed a spike in prospects cancelling meetings or deciding not to proceed with your recommendations? Worse still, have any clients enquired about cancelling their existing agreement with you?
- If licensees feel the need to review (and possibly tighten even further) their compliance auditing and monitoring functions, will this have any impact on you? Will the proposed separation of advice and product affect you? How about the recently announced changes to adviser qualifications? The accelerating journey to explicit fee structures, without ‘subsidisation’ from product, platform or ‘grandfathered’ clients?
- Formulate and implement a plan. These are big, challenging issues that will not simply go away. However, they are not insurmountable. Better still, they are solvable. Discuss issues with respected colleagues and peers, keeping abreast of the latest developments and formulate plans going forward.
- Then, actually implement your plan. This is where most plans fall over! A prudent business owner would consider a PDM/business coach/board of advice to help them monitor and objectively assess their ‘progress to plan’.
Remember… the current “pain” is more than offset by the knowledge that there remains a growing market for quality, professional financial advice.
For your consideration.