“…a skinny Black girl descended from slaves and raised by a single mother can dream of becoming president only to find herself reciting for one.”
Flexibility is the new leadership means for advisory teams driving for prosperity in 2022.
Particularly flexibility regarding expectations of advisory clients and advisory team members.
Assuming team members will naturally return to past accepted advisory work practices may frustrate post-Covid recovery plans. Covid dissembled and freed some advisory work practices that had origins back in the factories workplace of the 1800’s. Remote work practices of the past years have saved too many people too much money and time. Team-members will demand and seek out more of the real, healthy and prosperous benefits of flexible work practices if not with their old team, then with new teams. Expectations will be re-set.
Advice pricing for new and existing clients needs greater flexibility.
Built by decades of cost-plus paradigms, when the weak pricing muscles of advisory teams react to ridiculous levels of compliance or inevitable rising costs, their growth options appear limited to paths where there are more higher worth clients.
Although the majority of advisory teams talk about delivering value, their pricing is askew believing it is determined by cost or effort. This not only increases the pressure to find clients who can afford the higher pricing, it also brings unique challenges to uplift the prices of existing loyal clients.
If advice is a commodity like the products stacked on a shelf at the local Bunnings or Mitre 10, then cost and efforts are the main drivers.
However, most retail advisory firms do not consider themselves product-producers but advice providers.
For advisory teams, value is the driver.
Greater pricing flexibility helps link price to value, rather than cost or effort. It also opens up opportunities with existing and new clients.
It is time to consider discarding how many of the aging rock-stars of the advice industry made their money. Comprehensive advisory firms of the future will be built upon a proposition and price built upon value, rather than one built upon cheap fees and technical effort.
FAST AGING FINANCIAL ROCK-STARS
In 2021, Afterpay became Australia’s biggest ever takeover success story. The accolades poured forth.
From a deal-making perspective, the recognition was meritorious and understandable.
However, there are some contradictions to Afterpay’s success.
The company doesn’t make profits. It used the proven fintech model of making money purely from someone else’s money. Its market is the less self-controlled and financially-inexperienced 30-year-old purchasers (including my kids). It had a soaring share price-driven in large part by speculation of a potential liquidity event which did come true in August ’21 as the fintech giant Square acquired the company as a shortcut to sell more financial products into a young, less financially-literate audience.
Oversimplifying Afterpay’s achievements as one of the ‘big success stories of 2021’ echos the tensions the industry bring onto itself every couple of years when another enquiry exposes how clients best interests are continually forgone in lieu of ‘stakeholder’ interests.
However, the 2021 leadership award in the aging financial rock star category must go to the Financial Services Council (FSC).
In February 2021, the FSC put themselves back where they believe they belong at the centre of the country’s financial advice movement and released their own green paper to announce it.
It seems after they have taken the time to reflect upon both the fee-for-no-service actions of most of their own member firms (Australia’s large financial institutions) and their own inaction during those many years, they have decided to now lead the advice debate for the greater good of advisers and Australians.
Thank goodness. Almost makes me believe in Santa Claus again.
Their nostalgic bid for industry leadership reflects a significant connection and disconnection. The connection is to a business model fundamentally built upon the distribution of financial products, and the disconnection is their ridiculous grab to claim advice leadership without any acknowledgement how they presided over the bad practices from the ‘good old days’ when financial products masqueraded as financial advice at the expense of the best interests of Australians.
The Afterpay and FSC style of leadership is not going to provide more Australians with greater financial confidence in 2022 or any time soon.
Leadership in the advice marketplace is about creating and maintaining a sense of belonging and commitment to something important to every client that would otherwise be stuck in the ‘too hard basket’.
Fundamentally it is built upon what they value, not what they buy.
This is leadership.
Delivered at Biden’s Presidential inauguration just days after the infamous January 6 2021 insurrection, Amanda Gorman’s poem captures that belonging and commitment “…a skinny Black girl descended from slaves and raised by a single mother can dream of becoming president only to find herself reciting for one.”
This definition of leadership works for advice clients.
True advisory firms, as opposed to product distribution firms, seek a business model where clients ‘belong’, and pay to ‘belong’, not because they have ‘products under management’ but because they are committed to something very important to them – living life on their best possible financial paths.
This definition of leadership works for advisory teams.
Advisory teams, as opposed to product teams, seek careers where they make a valuable difference to the lives of their clients. Where clients are engaged not based upon the amount of assets, superannuation, mortgages, insurance premiums or hours worked, but upon what they perceive as being ‘of value’.
The Australian Government current reform efforts at the Australian Law Reform Commission reform regarding uncluttering the Corporations Act, and the Quality of Advice Review are good initiatives, but inquiries and reviews into the growing honey pot of financial services have become the default strategy of governments, unsure of the better leadership challenge of separating financial advice from financial products.
2022 is a leadership year.
Are you ready?
Let me know?
Photo credit: Amanda Gorman (theamandagorman.com)
ABOUT JIM STACKPOOL
For over 30 years, Jim has influenced, coached, and consulted advisory firms across Australia. His firm, Certainty Advice Group coaches, trains and is building a growing group of advisory firms delivering comprehensive, unconflicted advice, priced purely on value. The community of advisory firms aligns with Australia’s highest and only ACCC/IP Australia Certification Mark standard of comprehensive, unconflicted advice – Certainty Advice. He has authored four books regarding financial advice with his latest – What Price Value – available now in pre-release for launch in March 2022.