Business Hub

Ten steps to scalable advice

Scalable advice propositions, which leverage technology to make the delivery of advice more efficient and cost-effective, will allow investors and advisers to go on life’s journey together not just meet half-way. Peter Malekas writes. If the advice process was broken down, there’d easily be ten or more steps from goal setting to estate planning and everything in-between. The key to developing a relevant and scalable advice proposition, which is a panacea for many advisers, may lie in separating the underlying component parts. The average thirty-something-year-old couple isn’t interested in topping up their super or building a retirement income stream but they’re probably keen to buy a home, protect and provide for their family or start their own business. A professional financial adviser can add a lot of value. They can provide sound advice around saving and budgeting, mortgages, cashflow and debt management and insurance. They can identify poor financial behaviour; educate and guide clients to make smart financial decisions; help them set realistic goals; keep them on track; and act as a sounding board. All that before anyone’s even whispered the word, investing. Break it down By breaking down the advice process into steps or stages; allowing consumers to cherry pick only the services they value and can afford; and leveraging technology to automate repetitive and low value tasks, financial advisers can potentially reach a whole new audience. Let’s assume the advice process is made up of ten steps. A 30-year old may only need help with the first few steps. As they reach middle-age and accumulate more wealth, their financial needs will change and they may want help with steps 4-7. As they approach, and ultimately enter, retirement, their needs will change again. They may then seek advice on the final few steps. A scalable advice proposition is one way advisers can differentiate themselves and reach disengaged consumers. Historically, the comprehensive one-size-fits-all model was the only way consumers could engage an adviser, which is why so few did, but scalable advice has the potential to make advice accessible to more Australians regardless of the size of their account balance. The shift away from transaction-based advice towards strategic, objectives-based advice, combined with greater consumer awareness of their financial needs and the availability of new technology, is allowing new advice models to emerge. There’s a realisation that advice, if it’s based on the different values and priorities of consumers at the different stages in their life, doesn’t necessarily have to be comprehensive or expensive. Who’s winning the scalable advice race? Experienced advisers are ideally placed to come up with a viable scalable advice model yet it seems advice newcomers like industry funds and robo-advisers are making greater headway. A major roadblock for advisers is a deep-seated belief that most people still want holistic, face-to-face advice. Many advisers have already made up their mind about the type of advice a potential client will need, even before the initial discovery meeting. That presumption is curbing their creativity. If they’re to stay relevant, advisers need to listen to consumers and give them what they want, the way they want it. More often than not, it’s not expensive, comprehensive or high touch. It may be ad-hoc with a mix of face-to-face, telephone and online communication. It may be a second opinion or annual review service. For forward thinking advisers, demand for alternative advice models is an opportunity not a threat to their traditional business. The growing acceptance and take-up of scalable advice will be a win for both consumers and advisers. It will allow advisers to forge a long and fruitful relationship with new clients. A client may start off requiring simple, low cost advice but when they inevitably realise they need more help, they’ll know where to go. In financial services, once a relationship has been established, no matter how loose, it’s sticky. Peter Malekas is managing director of Moneysoft. This article was published in Professional Planner in February 2016 under the title 'Build long and fruitful relationships on scalable advice'