Over the past three weeks I’ve participated in the Best Practices Forum conducted by Professional Planner, as well as visiting the six finalists in the 2018 Practice of the Year competition currently being run by Centrepoint Alliance.

While very different in nature, all 8 events (forums and visits) had a number of common features. And, given the preponderance of negative news of late, I thought it might be helpful to share with you what I found.

First up, virtually all of the advisers I spoke to told me that they had experienced little (and in most cases nil) negative feedback from their clients as a result of the ongoing Royal Commission. Their clients were supportive and while generally disappointed with the somewhat parlous state of the financial services industry, they expressed confidence and support for their own adviser. This confirms the findings of our CATScan tool (confidential client survey) which has continually seen ‘relationship’ rated #1 out of the nine key areas we ask clients to rate their adviser. It seems that clients, while sceptical of the industry at large, respect their own adviser. Nice to know!

It is perhaps therefore of no surprise that advisers I’ve spoken to over the past few weeks were positive and pragmatic in their approach – they recognised the advisory industry is fast changing (or evolving) and have decided to accept the challenge, and to simply ‘get on’ with the business of running an advice practice.

Most of the advisers I visited participate in peer groups which are very often conducted across licensees. In many instances these groups have been set up and continue to be run without the involvement of licensee or product manufacturer. At these meetings they share experiences, ideas and offer advice to colleagues (and they are not afraid to ask for help). The emergence of these groups continues a trend highlighted in our 2017 Future Ready Report which showed industry wide:

  • One in five Australian principals are currently part of a study group that meets regularly, while
  • 22% expressed an interest in joining such a group in the near future.

Another mutual area of interest for these advisers was a keen interest in gaining a better understanding as to what ‘best practice’ actually is today. More specifically – how their practices compare to similarly placed businesses. Benchmarks are deemed very important by these advisers, as they reveal how their practice compares and (the real sub text) in what areas, if any, they can be improved. No doubt those study groups are discussing such benchmarks, and most importantly – how they are being achieved. What is a competitive level of profitability for small, medium and large practices? How about the average IT spend? Number of client meetings each week? And the average ‘support staff to adviser’ ratio?

Confidence in the future is leading these advisers to consider new business models and encouraging them to invest in their business. As to what form that investment will take is up to the individual but undoubtedly attracting (and retaining) good people, upgrading qualifications, technology and marketing will figure high in their business plans for the next few years!

And, given that 55% of today’s clients are aged 60+ and 45% are already retired, it’s a pretty fair bet that these principals will be focussing a good part of their marketing efforts (including their spend) on getting to know the children of their ‘maturing’ (a much better description than ‘aging’!) clients.

As a matter of interest, the average marketing spend last year was around 1% to 1.5% of the practice’s revenue.

Another area to come under scrutiny will no doubt be the range of services being offered to clients. With a 60+ years of age clientele, areas of interest have expanded to include, at the very least; aged care, estate planning and restructuring for higher net worth clients.

Where to from here? Here are three specific actions I think need to be on your agenda now:

  1. Know where your practice stands today in terms of; a) Client base – how satisfied are they with you and your practice? b) Staff – how happy are they with your practice? Are they the ‘right’ people for the future business model? c) Key benchmarks – how well does your practice stack up against similarly placed businesses in your local market?
  2. Join a study group – one that is active, encouraging and positive. If you don’t know of one, ask your licensee.
  3. Start thinking about your plans for the practice over the next 1 and 3/5 years. Lock in a time in your diary now, for a business planning discussion to start planning for the next 12 months. Ensure you get an early invitation out to your PDM, BDM or business coach.

All in all, the past 3 weeks have been extremely positive for me as I participated in these events – I hope you can say the same. But, if you can’t… maybe consider steps 1-3 above?

For your consideration.

Terry Bell.

All statistics & profit drivers referred to in this article have been derived from the latest analysis of the Business Health Data Warehouse – Future Ready VII.