Winning the long game for practices and licensees

Financial Advice businesses and Advice Groups playing the long game successfully

For financial planning to take its place as a profession, stakeholders need to look at the long game and explore a system free of product and conflicted purpose, and one that is founded on three foundations of trust:

  • Capability – do I trust the capability of the adviser across the desk? Does the system that accredits and monitors them truly look and act like a profession?
  • Character – is the adviser on my side? Does the fiduciary system they operate in support that cause?
  • Communication – is there consistency in everything I see, hear and read to reinforce my faith in the adviser and the advice experience?

The current environment has introduced substantial headwinds to achieving these components of trust; however, they represent the long-term future of the adviser, the practice they operate in and the Advice Group (currently called a licensee) supporting them at a client and operational level.

I believe there are five (5) core tenets that advisers, practices and advice groups need to aspire to in order to 'win' the long game:

(1) PURE REVENUE

The practice should make 100 per cent of its revenue from professional services and advice. For that to happen the client needs to completely trust the professional system. This means adviser must remove all conflicted remuneration, including the transitioning to a professional fee structure with no percentage-based remuneration for strategic advice. Emphasis will need to be placed on clearly explaining the value of advice to clients.

(2) DATA COHESION

Full enablement of the professional, integrated financial services model through one advice platform and multiple data sources (i.e. financial planning, banking, accounting, general insurance) is required. This will enable one view of the client and transform the client experience, as well as reducing the cost base for providing professional services.

(3) PROFESSIONAL OWNERSHIP STRUCTURES

The days of owning large businesses as a sole operator to preserve Buyer of Last Resort arrangements must come to an end. Advisers need to take their place alongside other professions in proper professional ownership structures. If everyone is a professional under the Professional Standards legislation, greater alignment can occur across the different areas of integrated financial services model. Advisers need to act and look like other professionals and achieve individual certification under a legally recognised professional model.

(4) PROPER GOVERNANCE

Flowing from a shift in professional ownership structures comes a proper board and governance process. Integrated firms should typically have an independent chair and independent directors. This structure drives proper strategy formation, governance and accountability to execute on plans.

(5) LICENSEES BECOME VALUE ADDED ADVICE GROUPS

Advisers need to believe in paying licensees a fair price for valuable professional support services once the licensing system is democratised. Professionals should choose to be part of an advice group, peer group or professional body because it provides a professional network of peers, adds value to clients and helps run a more profitable, efficient business. The advice group supports the adviser discharge their obligations as an individually certified professional under law.

Forming your 'long game' thinking and strategy

We have never seen more noise and instability. It’s easy to get distracted; however, the long-term business thinker forms their own view of the long game. My view comes from three driving forces:

  • What will the consumer value and genuinely trust?
  • What’s real and what’s a function of anchoring bias of the past?
  • What’s the most efficient and effective business process/model to provide value to consumers?

The timing of change is always hard to predict; however, if you look back the long game was more obvious. Form your own view of the “long game”, have a clear strategy and then work out the gap between your current vs. desired reality. The rest is change management, trusted resourcing, governance and consistent dedication and repetitious commitment.

This goes beyond financial planning; the integrated financial services model across accounting, mortgage broking, and insurance can come together to form one, integrated financial services profession.

It’s never happened, however, threats to transactional accounting, best interests in mortgage broking and existing insurance disruption provide an unprecedented case for change. How exciting is that for consumers and the professionals involved. Let’s keep an eye on the long game and remove the objections to the vision.

Best of luck everyone, what you do is important and has a profound impact on people lives. This is the lifeblood of any noble profession.