Australia is part of a global trend that has seen consumers flocking to independent firms for wealth management advice, and to SMSFs for retirement saving. As a result, the IFA sector has enjoyed a boom which is likely to continue.
However, with increased popularity comes increased pressure, and a number of factors are converging on IFAs which together, are changing the way advice firms run their businesses.
The ‘Me’ Generation
A key appeal of the boutique is the promise of personalised attention and completely tailored advice. Of course, this is a far more labour intensive approach than the mass-market cookie-cutter methods that consumers are trying to escape from. Clients want portfolios that take into account not just their age and risk profile, but personal preferences such as environmental-social-governance concerns. Even when using model portfolios, understanding the underlying investments well enough to ensure a client that they have no exposure to coal, for example, takes a lot of time.
Clients also want their adviser to be able to help them more holistically than before, seeking help with insurance; tax planning; income management, healthcare and more. The advice community is expected to be expert in a huge range of products well outside the traditional range of investment instruments.
Changing of the guard
The aging population and swing to self-managed investments has seen a huge uptick in clients looking for intergenerational wealth transfer planning. Often involving two generations with quite different needs and outlooks, this trend also requires advisers to be across a huge range of investment options plus the attendant tax, insurance and other needs that must be met to ensure client expectations are fulfilled.
It’s all in the delivery
In our social media world, multichannel delivery is a must for financial advisers. A client who reads a news story on their tablet about a stock their invested in can text their adviser, who will email them some research, call the client to discuss it, then call their broker to execute a trade. Online, text, phone and in-person advice can be demanded, all or in part, any day. This demands a huge level of responsiveness – and exquisite time management skills to ensure time is left in each day to instantly respond to unexpected client requests.
The answer is clones
Cloning advisers is, of course, not the answer, but it must feel like it with all the pressures of today’s financial advice world. Employing technology to remove every last possible second of low-value administrative work is the way forward-thinking firms are going to maximise returns both for their clients and for themselves.