How to adapt your business model in the changing Advice landscape.
Financial Advisors within Australia have experience huge changes to their business model over the past years. Changes to the way advisors are renumerated through the removal of trailing commissions and the implementation of a fee for service model is forcing advisors to revaluate their value proposition to clients. Here are some tips on how your advice business can thrive in the upcoming years.
Investment management may seem like a daunting task, but with the right tools your business could deliver this service directly to your client base. Many advice businesses have already started building in-house investment teams or are outsourcing the research and decision making to established model providers. Investment management will help you diversify your revenues, create more engaging relationships with your clientsand generate additional intellectual property within your business.
2. Target the right client base:
Knowing your skills and targeting clients who would benefit the most from your services can help streamline your business model and increase customer satisfaction. The needs of high net wealth clients differ greatly to clients who have only just started accumulating wealth. Smaller practices would benefit from focusing their attention to one client base until they have the scale and resources to service all client types.
3. Understand your product providers
When you recommend for your clients to sign up to custodial platforms or you move clients’ capital into investment trusts, you are introducing a third party to the relationship between your business and your clients. Understanding the relationship, fees charged, control, and risks these third parties present to your clients and your own business can help you make more informed decisions whilst navigating ASICs reforms.
4. Build your business model around transparency:
Transparency became a central theme in the Financial Services Royal Commission and many of the recommendations that came out for the report focused on improving the transparency of fees within financial products and the remuneration of financial advisors. Being upfront with clients about your remuneration and aligning with product providers that implement transparent fee reporting can help your business regain lost trust.