For financial advice practices wanting to maintain a viable business, doing nothing is not a valid option when facing a significant wave of changes to the needs of their client base.

Many financial planning practices have their origins in risk, superannuation and savings and have served their clients well for so long. Their clients needed, and most importantly wanted, these types of services from their adviser. Alignment was there.

Within our long-standing client satisfaction survey* clients are asked explicitly – ‘How well do you think the range of products and services your adviser offers matches your needs?’. Clients have consistently rated ‘range’ the third lowest out of the nine KPI’s.

55% of clients are aged 60 or more, while 45% are already retired. And in line with the baby boomer led ‘greying’ of Australia, more of these clients will be retiring over the next few years.

Direct and immediate impacts of the aging/retiring client base

But it’s impact will be felt across, I would suggest, most, if not every, financial advice practice.

Firstly, what retiring clients will be needing from their financial adviser is changing. Accumulation and protection will be replaced by annuities and income streams. While services which were hardly touched upon by many advisers in years past, are now being built into the client conversation, while CVPs and service packages are now expanding to address estate planning, aged care, retirement homes, philanthropic/charitable gifting, travel, Centrelink and medical benefits.

According to our most recent marketplace analysis, Future Ready IX**:

  • 42% of Australian practices offer estate planning
  • 35% offer aged care advice, while
  • 52% have a service to assist with Centrelink

This analysis also revealed that just 24% of firms were thinking of expanding their offer in the coming 12 months.

So, it’s a start – maybe late getting underway and with certainly a long way to go for many, but it is encouraging to see more and more advisers realigning their offer to meet their older clients evolving needs.

But for those practices who don’t adapt (and do it well), the impact will be most detrimental – eventually leading to some robust but ultimately disappointing client discussions and forcing many loyal/long term clients to seek the help and guidance they need from another source.

This brings us to our second area of impact – practices will be losing aging clients (and the revenue they contribute). For some it will be down to their fees – do they feel they need to be paying at the same fee level as they were say 15/20 years ago – when their needs and their capability to pay were perhaps much different than now. A fair enough question to be asked. But of whom?

For many, I suspect that the aging client will turn to a family member (son or daughter most likely), to ask this question (that’s assuming that their children themselves haven’t already raised the issue with their mum or dad).

The fact that research has consistently shown that children will quite readily ‘fire’ their parents’ advisers if the right opportunity presents itself, suggests that advisers should not necessarily assume that aging clients will remain their clients for ever.

In addition to ensuring that their solution suite matches their colder clients’ needs, marketing to and attracting new clients will become an increasingly important imperative for advisers.

What will the future look like?

It remains to be seen what % of practices will be actually able to expand their range to offer and then deliver new services and/or new clients? Capacity as well as capability challenges, I fear, are lying just over the horizon for some and while perhaps out of sight, they remain.

But it’s not all gloom and doom. There is ample good news from our various research initiatives; by far the majority of clients have a very high opinion of their adviser – in fact ‘Relationship’ is our top rated CATScan KPI. This is clearly reinforced by the findings that 42% of clients surveyed have remained with their adviser for over seven years, with 91% indicating that they expect an even longer-term relationship. 86% of clients state that they’re more than happy to refer their adviser to others – a strong indicator of how highly they value their own adviser.

The above has led us to conclude that it certainly isn’t too late and clients will be more than happy to support any endeavour from their adviser to expand their range of services, while also introducing them to their children. As to how advice practices might actually go about doing this…..that’s another discussion!

For your consideration.

*CATScan Client Survey database contains ratings and feedback from over 50,000 clients of advice practices

**Future Ready IX Report: Insights into the Australian Financial Advice Profession