The recent ARF article, 'The wealth adviser exodus has bottomed out (for now),' began with the numbers. "More than 12,000 financial advisers have retired or handed back their registration since the financial services royal commission, which levelled widespread allegations of misconduct against the sector in 2018. The exits represent a 43 percent decline in workforce size in just five years".
A new model for financial advisers
The scale of the change in adviser numbers is remarkable. So many have been seemingly unable to contemplate a way to operate effectively in today's market.
The new resized market presents a once-in-a-generation opportunity to prosper. There are 12,000 fewer competitors for a start. At the same time, the complexity of the current economy and markets means there is a genuine need for high-quality financial advice.
However, it's also clear that new approaches are needed if advisers are to satisfy the demands of clients and regulators profitably. Business as usual is over.
The regulatory environment now demands a standard of rigour that, with unchanged processes, costs more to execute. A step-change in business efficiency and productivity is needed.
The regulators are clearly aiming for a better, more reliable outcome for retail investors. The trend is towards higher professional standards, education, and a more genuine focus on delivering to clients' best interest obligations.
Then there is the contemporary investor. A new breed of digitally savvy, well-researched investors with higher expectations is starting to replace the profitable baby boomer segment. Furthermore, advisers need a powerful value proposition to earn and re-earn the trust of a market disenfranchised by the Commission's horror stories.
Institutional investors are now fully onboard with active portfolio management using Dynamic Asset Allocation as the way forward. The use of DAA using a managed account solution presents a compelling opportunity for progressive advisers and investors.
Looking at the new model through the eyes of a client, the case is compelling.
- The financial adviser works to understand the investor's current circumstances, future needs and aspirations. Everyone wants to be understood and focused on achievable goals.
- A bespoke statement of advice aligns the investment strategy with financial goals. The investor receives advice that is tailored to their goals and circumstances.
- A Goals Based DAA managed account solution aligns the investment solution and products with the client's goals. The client's focus on goals supersedes the confusion of trying to understand the vagaries of markets. Value for money becomes more transparent.
For advisers, the new model provides:
- Inherent compliance with client best interest obligations. Obligations that are not well served by an assessment of risk tolerance and the use of investment products that cannot be targeted to specific financial goals
- A compelling value proposition based on individual client needs
- The business efficiency of using a specialised active portfolio manager, managed discretionary account authority and the potential for a single provider to deliver a solution across the breadth of short, mid and long-term advice strategies.
- Growth is driven by the ability to increase value-creating, client-facing time by over 30%
The Dynamic Asset Managed account solution enables advisers to plug the new model into their business with the simplicity of managed accounts.
Contact us to learn more about how the new model can change the game and benefit your advice businesses.
Ask us to show you how it can lower costs, simplify business, and satisfy clients and compliance obligations. All in a way that's fit for today and tomorrow.
