Is the first year of this decade over yet?
Hardly.
This week’s Economist leaders suggest, what the 9/11 attacks did for air travel, covid-19 has done for what we consider ‘normal’ – tests, masks, lockdowns, tracing, documentation, zoom, climate impact, property prices, health care, and inequality.
While many of the 2021 trends will strengthen into 2022, will the uncertainty that pushed many advisory firms to surpass their business plans in 2021 also continue?
There are some obvious challenges.
RETENTION
Putting aside unpredictables like a technology attack on client files, team retention will occupy most leaders of advisory firms in 2022.
Leaders will need fresh, flexible thinking to encourage overworked, fatigued and performing advisory teams of 2021 into a different 2022.
CPA Australia representing approximately 170,000 accountants recently polled their accounting membership to discover that approximately 70% were considering new job opportunities. 33% were ‘thinking about it’, 27% have started taking steps and 13% were already looking elsewhere.
Accounting Group Findex surveyed 500 small businesses to discover the top issue for small business (53%) was team retention while nearly 60% of employers hope their team ‘rarely or never’ work from home in 2022.
Expecting the up-and-coming talent to repeat the career steps of those leading them into a decade where past success won’t look like future opportunities is a tough ask. These conversations are going to be difficult for many advice firm leaders who are better skilled at client conversations than team leadership conversations.
TECHNOLOGY
Technology however is the advice industry’s climate issue.
And thanks to Covid-19, it too is accelerating.
Many advisory firms operate happily in denial claiming their lower fees, size of funds, breadth of experience, personalised touch or outstanding performance makes their ‘bread-and-butter’ investment, compliance, superannuation, risk, or mortgage advice less vulnerable to the inevitable digitisation sweeping through the world’s financial product-distributors.
Kate Howitt, an asset manager for Fidelity, wrote an insightful and ironic piece in the Fin Review this week quoting Theodore Levitt’s “Marketing Myopia“.
The insight is Levitt’s message of change saying “…there is no such thing as a growth industry, only firms organised, trained and operated to create and capitalise on growth opportunities“.
The irony is a piece written by one of the world’s largest financial product-distribution companies extolling oil and gas companies to shift offerings to more socially acceptable renewables as the financial giants themselves continue to build financial products using a ticket-clipping product chassis first designed in the 1940s.
Another confronting trend for leaders of advice firms is regulatory impact.
REGULATION
Leaders of advice firms hoping for regulatory clarity in coming years will be disappointed.
The deep-seated ticket-clipping origins and entitlements of the financial services industry will continue to confuse regulators into believing that advice and product distribution are two sides of the same coin and thus plague financial advice industry firms with ridiculous impositions.
The recent initiative launched by the Australian Law Reform Commission (ALRC), to address the lunacy that is today’s Corporations Act (particularly Section Seven) is welcomed and overdue. The long, dark and questionable compliance interpretations due the myriad of badly drafted and interconnected definitions have caused no end of harm on careers, practices and client livelihoods.
Corps Act is a mess, but unfortunately a powerful one, that will require years of leadership to drive the needed knock-down rebuild.
Aside from Corps Act, renewed attempts to deliver on the toughest of new advice guidelines – FASEA Standard Three – highlights continued low consensus, high uncertainty and need for leadership. The latest range of responses (which included us) to yet another call for submissions suggests more paperwork and less regulatory leadership ahead.
Don’t hold your breathe on any regulatory leadership coming from politicians.
The vote-catching farce of nobbling then re-instating experienced advisers suggests Canberra’s advice regulators leadership is on par with their climate leadership.
So how are leaders of advice firms best equipped for the coming “Reconsideration” decade?
LEADERSHIP
I don’t believe the false-positive leadership claim of the advice profession by the Financial Services Council (FSC) will be taken too seriously as it was their members under their watch that contributed the majority of headlines and regulatory pressure during Hayne’s 2018/9 Banking Royal Commission.
I do believe the strategy for the coming decade is leadership.
Client leadership – one at a time.
Quoting Levitt again from Howitt’s insightful piece (even though she was referring to the oil and gas industries) “…Levitt’s prescription is that industries buffeted by change must redefine their business to be customer-oriented, not product-oriented”.
Customer-oriented can mean many different things to different people.
But for the coming decade of Reconsideration, I reckon it means redefining the value provided, the pricing charged, the propositions offered from the client’s perspective first and foremost.
It also means recognising that advice is not another product and building advice brands that thrive on this premise and proposition.
I can’t agree with recent articles like this one claiming advice is the weak link in today’s financial services marketplace.
The weak link is the number of firms unorganised, unprepared, untrained to capitalise upon the growth opportunities coming in the decade of Reconsideration.
What do you reckon?
Wishing you a restful festive season.
.
Photo credit: Shutterstock_17904445
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.