Enough is being written (daily it seems) about the changes currently underway within Australia’s financial services system, and how these changes will affect the industry and benefit clients. Whatever the final details, it is fair to say that changes are coming. These changes will be significant, they will require careful consideration and are likely to happen reasonably quickly.

My question to you is – what do you intend to do about you & yours? Especially if you’re one of the 68% of Australian practices owned and managed by a single principal, who is aged around 60 years.

It seems to me that there are a number of viable options to consider, but… the clock is certainly ticking, and decisions will need to be made;

  • Decide if you’re going to be still actively involved in advising or managing or both when these changes start to really kick in. Perhaps this is the hardest decision of all – it’s deeply personal and, for many, confronting – which is probably why only 3 in 10 practices have actually documented their succession/transition plans.
  • If you can’t see yourself remaining actively involved in your business when these changes become law (industry estimates seem to suggest that around 25% of advisers will be exiting – an absolutely staggering figure to comprehend), then my view is that you should, at the very, very least start making your plans NOW. The longer you delay the decision, the less viable some options will be. There will certainly, for example, be more sellers and fewer buyers as each year passes.
  • If you intend to stay, consider your current business model – will it be viable into the future? If you have any doubts, start thinking about what you need to do now, to ensure your business is future-proofed;
  • How does your business compare to the market in terms of efficiency, productivity, profitability? Have you benchmarked it recently?
  • Is outsourcing your back office to contain costs and/or take advantage of the latest technology something you’d like to consider?
  • If you’re like the majority of Australian practices and have a pre-retiree/retiree clientele, how will you retain their relationship, continue to deliver value and thereby ensure your ongoing viability in the face of their changing needs?
  • Will you be able to attract a new client demographic, to possibly replace any retiree clients who leave you? Generation Y for example (aged 21 – 35 years) already comprise around a third of Australia’s workforce – how many do you have as clients or, at the very least, prospects? Their expectations as to what they need, how it should be provided and how they will pay for it will be very different to their baby boomer parents (your clients)!
  • Perhaps an expanded product/services offering will be required?
  • Or is it time to focus on a specific market niche – a deep and narrow strategy?
  • Is the broader, well established (and proven) professional services model of accountants and lawyers, a possibility for you?
  • Will you need to consider bringing in a younger, suitably qualified adviser, who has both interest and the ability, over time, to take over the reins. And if you’re thinking your children – don’t assume, ask them!
  • Is a merger with another practice an option you want to explore? It doesn’t have to be with another financial planning business either – accountants, mortgage and general insurance brokers for example, are all serving similar, or even, the same, clientele.
  • Finally, looking forward, what will be your preferred role in these options – adviser, chairman, mentor?

Talk to colleagues and managers whose opinions you respect and value. Gather your thoughts, make your decisions and draw up a plan to ensure you and yours are taken care of.

For your consideration.

Terry Bell.