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The competitive edge: 10 ideas to help practices survive and thrive


Author: Janine Mace

Although competition and change can be a threat, they also bring opportunities.

Last month, Financial Planning explored the many challenges buffeting the planning industry. While the outlook was sobering, there are still many causes for optimism.

Steve Prendeville, director at Forte Asset Solutions, believes planners are in a position many other industries would envy. “We are in a growth industry and a legislatively protected growth industry through compulsory superannuation.”

Sue Viskovic CFP®, managing director of Elixir Consulting, is another who feels the outlook is bright. “The landscape is changing, but there is still a place for full scope advice and it is very firmly entrenched. Clients want people who can help them on their journey.”

Paragem managing director, Ian Knox, is particularly optimistic when it comes to the outlook for younger planners. “They are outstandingly committed to new ways of doing things.”

This willingness to embrace change will be vital in a post-FoFA world, as the reforms are acting as a catalyst for competitive pressures that have been building for some time, Knox says.

“FoFA is very difficult for practices that have really been acting as life agents over a long period with thousands of inactive clients. They are faced with the dilemma of running down the business value from their old commission book or making big changes,” he says.

Advisers must also appreciate that increased competition is not just due to FoFA, as deeper shifts within the industry are playing a role, explains Strategy Steps director, Assyat David.

“The issue will be for planners who are going to stick to historical processes. If practices treat FoFA and its changes as merely compliance processes and something they need to get over, they will find it increasingly difficult,” she explains.

Ten strategies to compete

So, what strategies can practices implement to boost their competitive position?

After talking to the experts, Financial Planning has come up with a list of 10 ideas to help practices survive and thrive.

1. Put clients at the centre

The experts all agree one of the best competitive strategies is just doing what financial planning practices do best – deliver good quality advice focused on the client.

“Advisers need to be increasingly client-centric, ensure they are delivering on the service side and focus on client engagement,” Prendeville says.

“They need to recognise we have a shifting client base which may want new approaches like customised or one-off advice.”

Knox believes this recognition is essential to competing successfully. “We would do well to remind ourselves consumers want good planners, they want transparency and will pay fair value for a trusted, honest relationship.”

A key competitive strategy is focusing on the value of advice and more transparent fees, he argues. “This means ensuring the full cost and ‘value’ of advice is accepted and understood by the client.”

2. Focus on strategic advice

Most experts agree the days of product-focused advice are over and success now is all about delivering quality strategic advice.

“Historically, planners have helped in developing strategies and implementing advice, so there is a large implement and production/service placement component. But now high-net-worth (HNW) clients have changed to a ‘do it with me’ not a ‘do it for me’ approach. They want greater involvement,” David explains.

This is particularly the case with SMSF trustees, who are seeking strategic advice, not a product placement service. “There is still an opportunity there, but it’s not the same anymore. If practices adapt their offering, then it will lead to opportunity,” she says.

“In this new world, the adviser’s client value proposition needs to shift towards providing strategy and tailored advice, with product selection falling out as the end result of this process.”

Practices must also adapt to allow self-directed clients to be responsible for implementation using products such as direct equities or Exchange-Traded Funds.

Greater emphasis is required on customised, rather than ‘off-the-shelf’ advice solutions – something which meets the demands of both clients and regulators, David says.

“Quality versus compliant advice is a focus for the regulators, as the recent ASIC ‘shadow shopping’ exercise showed many planners were not providing personally tailored advice.”

3. Seek out internal efficiencies

Another key to competitive success is to devote greater attention to the business itself.

“Historically, you could run a planning business without great business acumen. In the future you will need to apply greater focus on how you run your business,” Viskovic says.

Prendeville agrees: “Practices need to continually innovate and will need to work a lot harder in the future. You need to always be retooling and refining the business.”

This means focusing on every aspect of the operation. “Some practices which have lazy aspects to their business need to rethink both the dealer side and the client side,” he explains.

“Practices need to look at staff utilisation rates and business efficiencies and work on building better business efficiencies.”

David agrees: “Internal efficiency is a fairly important aspect of the business as there has been a little bit too much fat in some areas and cost pressures will continue even with the market picking up.”

Viskovic believes practice owners need to spend time ensuring they have a total handle on this area.

“It is not essential to grow the business, but you do need to get smarter with tools and efficiencies to continue in business and service your clients. You need to take a close look at the systems and processes to keep costs controlled and the business profitable,” she says.

“You need to get smart in the back-end, without necessarily changing the front-end that clients see.”

4. Review the business model

Successfully competing in a changing market means knowing what services your business provides and who your ideal customers are.

According to Viskovic, in the past most advice businesses serviced any type of client. She says the approach now needs to be more nuanced, with some clients – both high-net-worth and small balance – no longer a good fit as they cannot be serviced cost-effectively and efficiently.

David agrees: “Practices need to think about their business model and what they offer to clients.”

Undertaking this type of evaluation can be as simple as starting with a blank sheet of paper and considering what advice model would compete successfully in the current environment.

“Then identify the gaps compared to the current model and the areas needing to be addressed. It can be hard when it is your own business and you may need an external person to help,” David suggests.

Practices also need to assess how they will deal with the growing client demand for limited advice.

“Single issue advice is often treated as phone advice and as an incubator before moving the client on to holistic advice, but practices need to think about how they are going to deal with it and how they will use it within the practice,” David says.

Clients at every wealth level are looking for single issue advice and practices need to recognise this if they are going to successfully compete, she says. “They need to decide whether they are going to offer single issue or holistic advice, and then they need to hone in on their specific type of client advice.”

Prendeville agrees: “You need to build business models that can deliver single issue advice and best of breed managers.”

5. Consider specialising

Another competitive strategy is to develop an area of specialisation.

“Some advisers are looking at providing specialised advice in two or three areas, so they can market themselves as specialists and thereby attract specific clients,” David explains.

Areas such as aged care or estate planning can be valuable specialisations. Practices can also consider targeting specific demographics, such as young executives or accumulators aged 35-49.

There are other approaches to specialisation, Knox says. “We foreshadow more and more practices looking for points of differentiation, such as the ability to offer clients access to fund manager expertise at mandate level (separately managed accounts) and portfolios that are tailored with individual ownership (individually managed accounts).”

David agrees there are other pathways to consider. “If they are offering generalist advice, then consider partnering with an expertise provider such as an accountant or lawyer. The practice can then act like a medical general practitioner and pass the client on to a specialist. This is the family office approach.”

More and more practices will consider becoming the central point of contact for a client’s overall affairs, Knox predicts. “They then bring in experts to handle the individual tax, investment and product issues – this brings in a lower cost product in return for higher quality, higher cost advice.”

6. Review pricing

Carefully considered pricing is vital for effective competition.

“Creating the pricing model needs a very high focus, especially if you are introducing a new fee structure to clients,” Viskovic says.

Although none of the experts believe slashing fees is a good long-term competitive strategy, they accept the days of fat margins on every practice service are over. Rather, the secret to a successful business in the future will be to clearly articulate and demonstrate value in specific areas and trim margins in others.

“The components of financial planning where you are seeing increased commoditisation will see greater price competition, but in other areas it will not be as intense,” David explains.

Areas where skilled planners add value need to be better highlighted to clients so they can see the benefit they are receiving.

“Pricing will get sharper, but some areas have a lot of value add and you need to be able to articulate it. The value is not always in investment returns or tax saved or the extra social security benefits obtained, it can be tailoring advice to the client,” she says.

“It can be about giving clients comfort about their situation and making sense about their activities.”

7. Focus on marketing

Although marketing has always been important, in an environment of heightened competition, it is essential.

Viskovic acknowledges competing with high profile marketing by industry and low cost public offer funds is tough, she however believes planners have a good story to tell. “Offers of low cost transactional solutions are not apples-for-apples competition. What is required by good advisers is the effective means of communicating that you get what you pay for and the difference of full advice.”

To compete successfully, planning businesses need to be more focused in their marketing efforts.

“You need to have a good look at how you market the business and this is not just advertisements but referrals as well. You need to ask yourself what you do in relation to centres of influence,” Viskovic says.

Technology also offers cheap ways to effectively market the practice.

“Consider what do you do in terms of a blog, or videos that allow clients to get a feeling for the adviser before they come in,” she notes.

Prendeville agrees planners cannot afford to relax. “Practices need to go out and build their business, both externally and internally.”

Effective communication is a vital part of this, he says. “Advisers need to segment their clients even further by preferred client communication methods, including face-to-face, email, phone, Twitter, on a needs-only basis, or a combination of all of the above.”

8. Bring accountants into the tent

For many practices, changes to the Accountants’ Exemption will mean yet another competitor entering their patch. However, even this threat can be turned to advantage.

“Changes to the Accountants’ Exemption definitely have the potential to create significant change in the industry. But the biggest peril is to pretend it is not happening,” Viskovic notes.

“Financial planners need to talk to their accountant referrers and discuss how they can work together.”

She believes the competitive challenge could represent a real opportunity. “Planners may need to assist them to get a limited licence to create a better relationship. If the adviser brings solutions to the accountant, it can cement the relationship.”

9. Use technology

Technology and tools can provide a valuable edge in the competition battle. Prendeville believes they can substantially boost productivity in an era of tighter margins. “Technology aids sustainability and also allows continuous improvement.”

New software can help practices automate many of the administrative tasks required under FoFA and by self-directed clients. For example, the new cloud-based platform from Wealthtrac brings together SMSF administration and reporting needs into a single, centralised hub for a flat monthly fee.

“Many of the new offerings are web-enabled technology, with clients engaged at a higher level, including ongoing management of the portfolio, achievement of lifestyle goals and ‘bucket lists’, and document storage in encrypted boxes. This will change many things,” Prendeville predicts.

For Viskovic, technology is vital in terms of client engagement.

“Practices need to think about how to communicate with clients in a more tailored and personalised way. One way is to use technology through blogs, for example, and to automate their processes in a way that makes them meaningful for clients,” she says.

“For example, use technology to automate tasks for the review process, so there is more structure to the processes and the activities undertaken. Ironically, businesses that get more process-driven, deliver a more personalised and effective experience for their clients.”

Viskovic believes this can give practices a competitive edge. “You can deliver better service to clients while improving internal productivity and processes.”

Technology also assists with building client engagement, she says. “You need to think about the experience you want the client to have with your business from the start. For example, sending them webpage links to get clients to do some research before they come in.”

10. Ensure you stand out

The final tip for effectively competing is very simple – ensure people know who you are and be the best around.

Although this is not easy in a crowded market, with everyone from the local supermarket to the mortgage broker next door offering financial products and advice, but being recognised as someone who offers top quality, professional advice and client service will always win out.

Prendeville believes the key to success is not about trying to survive, but trying to stand out.

“We will see a continuing arrival of new entrants into the industry due to the money involved, so practices and advisers need to prove their relevance. We need to build a stronger profession and take back the position of trusted adviser to clients,” he says.

This will be particularly important in the face of increasing market concentration. In that type of environment there are always customers looking for personalised service tailored to their particular needs.

“The danger is with 90 per cent of the market institutionally owned and only two major software providers, it will lead to homogenised advice. You will go to five different businesses and basically get the same advice,” Prendeville explains.

He feels consumers will increasingly seek out those offering something different. “I believe boutiques will flourish, as we see rising consumerism seeking diversification from mass homogenised advice with manufacturer product tilts.”

Clients want an adviser that cares about their goals and this can be achieved through high service levels at every interaction.

“You need to create meaningful service packages for clients so they want to engage with the practice. For example, create review packages that detail what you will do in the meeting, the lead up to the meeting and allow the clients to add items to the agenda,” Viskovic suggests.

“Make it a forward looking meeting covering how you will work together in the future. Update the client’s goals and objectives and make it a bit like you are meeting each other for the first time.”

For Part 1 of this article, go to:


Action steps for your business

Strategy Steps director, Assyat David, suggests planners and dealer groups consider the following strategies to deal with today’s competitive challenges:

• Access resources to train and support new and existing advisers to reduce the risk they will fail ‘quality advice’ measures.

• Adapt advice processes to deliver strategic advice tailored to different client circumstances.

• Access and utilise practical tools (e.g. decision trees and advice steps) to ensure consistency of quality advice.

• Access communication and education tools to help advisers explain the appropriateness and benefit of the advice to the client’s specific situation.

• Access client conversation guides, advice processes and marketing tools, so advisers can expand their client value proposition into new and enhanced advice areas (e.g. aged care, estate planning and SMSF strategy).

• Access checklists of client strategies based on life stage, age and circumstances to provide advisers with ideas during client reviews.

Source: Strategy Steps