Business Hub

A game of scale: Building sustainable advice businesses

Making financial planning scalable has been a major challenge for advice practices. There are only so many client meetings and advice documents a practice can physically squeeze into a week. However, that number can be a whole lot bigger with technology. It used to be widely accepted that the optimal number of clients a single adviser could actively service was between 75 and 125. Beyond that it was deemed impossible to maintain a regular, personal relationship. But a growing number of advisers have found they’re able to have deeper relationships with more clients and efficiently manage a swelling pool of assets by integrating cloud-based solutions into the advice process. Tasks like collecting information, preparing documents and conducting reviews, which previously took hours to perform, can now be completed much quicker. Technology enables practices to gather, consolidate, store and retrieve data infinitely faster and automate low-value, administrative jobs like disseminating information and arranging client meetings. Advisers who have allowed technology to take over repetitive, manual work are spending more time in front of more clients, which is where they add the most value. By letting go of the belief that they need to personally interact with every client, every step of the way, they’re now able to start building efficient, scalable advice businesses. Where to begin? Advice tools don’t have to be complicated, expensive or difficult to integrate into a practice. For many advisers, budgeting and cashflow management tools which aggregate multiple bank, super and investment accounts to provide a clear, accurate picture of a client’s total wealth position, have been a simple and effective way to start the automation journey. They allow advisers to gain an intimate understanding of a client’s wealth and liabilities, revenue and expenses, and financial habits, which is a key requirement under the regulator’s “know your client” rule. At the same time, it eliminates the need for them to constantly request and chase up information. As a result, the initial discovery process is accelerated. Advisers can go deeper quicker, uncover their clients’ personal goals and objectives, determine their (financial) capacity as well as ability to tolerate risk and then develop a strategy to maximise the probability of them achieving their goals within acceptable risk parameters. Another key benefit of cloud-based technology is that both parties can access and update information at any time, from any location. Clients don’t have to wait for their quarterly review or even until their adviser’s office reopens in the morning. Technology is fostering more open, transparent and collaborative relationships. Entry-level advice With new cloud-based advice tools, advisers can reach previously disengaged, unadvised market segments. Whether someone is at the start of their working life or looking to retire and want to make their wealth last, professional advice is critical, yet only 20 per cent of Australians currently receive advice. Technology can empower advisers to offer scaled advice solutions which meet people where they are in life and at their price point. Advice on budgeting and cashflow management is an ideal entry point to advice. Once a basic advice relationship is formed, people can take up full-service advice down the track, if they want. The advice industry still has some way to go when it comes to adopting technology and reaping the benefits. Modern advisers understand the limitations of technology. They know a computer can’t engage in deep conversation. It can’t uncover a client’s true, personal desires because it can’t ask probing questions. A computer can’t hold a client’s hand and provide support throughout their financial journey nor can it proactively foresee potential changes to a client’s life, for example, redundancy, sickness or an inheritance. Therefore, technology will never make the role of adviser redundant. It can, however, help advisers lift client engagement, manage regulatory and administration burden and boost productivity.   By Peter Malekas, Founder and MD, Moneysoft  As published in Professional Planner, October 6, 2015