The eleventh sitting of the mandatory FASEA exams started this week.
An adviser preparing for her exam suggested that once most advisers had sat these exams, she hoped the regulator might reduce their onerous compliance burdens.
Hope isn’t a great business strategy.
While Australia has a regulator that views compliance of financial services in a similar way that Qantas views safety, and a Corporations Act (refer section 766b) that requires pages of definitions to suggest there is little difference between financial advice and financial products, it’s unlikely compliance is about to ease.
Atop this, the current exams only represent the first effects of FASEA’s Code of Ethics. The lack of legal precedents testing FASEA’s Code means compliance will continue to be based not only upon the probabilities but also more remote possibilities for some time still.
The legal precedents will evolve, but advisers still need to deliver valuable advice and run profitable firms in the meantime.
RETURN TO FIRST PRINCIPLES
There is an proven path for advisers to progress in these times.
It is a path already navigated by most professional advisers. It involves trusting the origins of why advisers became advisers in the first place.
Most advisers need go no further than to reflect upon their very first advice client.
First clients didn’t agree to engage because of the adviser’s experience as there wasn’t much. Neither did early clients engage based upon technical knowledge as it was still theoretical. Nor were first clients attracted due a referral network as professional reputation and connections were still infantile.
Early clients engaged primarily because they valued and trusted the adviser and the offer. Something many advisers today seem to discount or have lost faith in their client’s ability to trust and value that access.
For the vast majority of today’s advisers their careers were not built upon the product distribution business models which is the fundamental driver of the increasing compliance pressures due the industry’s systemic misalignment to the vested interests of product providers.
Most advisers became advisers to help clients live their best possible financial lives and clients engaged not because they wanted a product, but because they sought a trusted adviser who took the time to understand their options and the probable consequences to ensure their best interests were being served.
Rather than fearing the consequences of onerous compliance, trust the value of the proposition.
Fear serves little apart from fuelling frustration, doubt and stagnation.
Trust is essential for growth.
VALUABLE BEFORE AFFORDABLE
Fuelling adviser’s fears is the catchy and deceiving debate centred on delivering affordable advice.
The most important issue for Australians seeking advice isn’t greater access to affordable advice but greater access to valuable advice.
The affordability debate deceives consumers into believing that cheap advice is good advice. Why this debate is even considered when the world is awash with the consequences of cheap and mass-produced food, plastics, oil, drugs and social media relationships is more proof of the power and influence of the industry’s product-based paradigms.
It deceives advisers who remained too focused on adjusting existing business models rather than test new business tools and models that better align with their objectives to genuinely help clients make smart financial decisions and live their best financial lives..
Advisers have access to a better path for their clients, their careers and their firms.
CLIENTS FOR LIFE?
The additional costs and pressures from additional compliance calls for greater priority on the delivery of client value.
Of course, not every existing client will appreciate or value the increase in price that may be required to profitably deliver advice under excessive and seemingly uncontrollable compliance guidelines. Finding new advisers or firms for these clients must be part of every firm’s growth strategy.
But hoping or waiting for compliance regimes and costs to ‘settle’ is as productive as picking Melbourne Cup winners.
These are the times, like none before, for advisers to implement the new tools and models to engage their clients on value. The offer today is more transparent and needs renewing annually, but it is also so much more in demand.
Great times to be building great advisory firms.
What do you reckon?
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 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 three books regarding financial advisory firms and is due to release his fourth book mid this year – What Price Value.