Conditions are great, so why not experiment?

At present, Australian advisers are enjoying the strongest market conditions ever thanks to unique alignment of once-in-a-lifetime superannuation legislation and record stock market levels. The supply of financial advice currently can’t meet the demand for services. These are the best of times for advisers. Or are they?

Just as many financial products largely look like one another, many financial advisers are beginning to look like one another.

There appears little incentive to really distinguish adviser offerings. Simply turning up seems to be a good value add for owners of advisory firms, when average business growth rates are approximately three times those of the overall Australian economy (i.e. around 14% according to most surveys, including our own Dashboard™ Reports).

When supply of advice can’t meet current demand, a compliant value proposition of commoditised financial products seems to be good enough.  It’s almost impossible for most owners of advice firms to think beyond the current day-to-day challenges of managing the demands on their time.  Owners of advisory firms who are in the business of giving advice just don’t have the time for anything other than reacting to demands.

But those owners of advisory firms who are in the business of getting paid to give advice are taking special note of current conditions and preparing their client value propositions for 2008, 2009, and beyond.

Our industry is on a well-trod cycle.  Understandably, in our day-to-day dust storms we can’t see the forest for the trees, but in the rare moments when we can get up to 50,000 feet for that eagle-eye view, we see current conditions as simply a part of a greater journey towards industry maturity.  Any Economics 101 student can explain the basic tenets of product commoditisation.  Current market conditions will only accelerate it, and our industry has to cope with it.

But that’s not today. Today we have to meet demands and make hay while the sun shines. Maybe.

I challenge this.  I believe we have to respond to our success today. With the advantage of market conditions putting a strong wind behind us, we have to make the most of that advantage today. The question is how.

These are the times to experiment and test our client meeting scripts; to invest in new processes, in new people; to test new strategic alliances; to put something aside for when the wind is inevitably back in our faces, and the risk of experimentation is much higher.

Alternatively, you can take the old approach and continue to do what you have always done and always expect to make the same returns. You can continue to emphasise your ability to choose financial products for your clients. You can continue to add more clients to your client base. You can continue to charge the same way for your services. You can continue to try extracting more from your current team.  You can continue to charge a fee for services from clients you rarely see, and reassure yourself that you’re adding value. You can continue to write your own plans because no-one else can do it as good as you.

A recent study by our USA partners (CEG Worldwide, see of individuals with between US$500,000 and US$5 million in liquid assets, found that overwhelmingly they prefer working with wealth managers over other types of advisers.  In fact, more than 77% expressed a preference for working with wealth managers.  Not surprisingly, today the majority of financial advisers in the USA (77.9%) have taken to calling themselves “wealth managers.”

I believe many Australian advisers are following the lead of these USA advisers and neatly relabelling their proposition as “wealth management”, while continuing to primarily offer a superannuation placement service.  We all know that simply calling oneself a wealth manager does not make it so.

You can continue to do what you have always done, because understandably you are making good money at the moment.  Or you could do what most owners of advice firms aren’t doing. You could take the view at 50,000 feet, of where we are going in this great industry, and use current conditions to test your theories.  You could start exercising new advice muscles and prepare for the proposition your future clients will demand in 2008, 2009, and beyond.

These are the best of times to be building a valuable advice brand.

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