Is there a future for financial advisers?
There were 2 major reports released for the future of financial advisers this week (June 5, 2021) – Australian Financial Advisers Well Being Report produced by e-Lab with Dr Adam Fraser and Dr John Molineux, the 2020 Australian Financial Advice Landscape by Angus Woods at Adviser Ratings.
These reports absolutely confirmed what every financial adviser in Australia already knows. Our industry is in the middle of one almighty shake-up which many won’t survive. There was plenty of gloomy news -
67% of financial advisers in Australia are experience some level of depression.
77% experience high levels of frustration in their role.
According to Adviser Ratings there were near 28,000 advisers in Australia in 2018. These numbers have been in steady decline. They predict that by 2023 the number will be just over 13,000. Less than half in 5 years.
Many practices in Australia remain challenged by rising costs (average 10%), regulatory red tape and administration, complexity and process inefficiencies.
HOWEVER, as Angus Woods explains in the 2020 Australian Financial Advice Landscape report
“The good news is that we are seeing plenty of examples of practices that are thriving, having redesigned their business and value proposition. This will serve to meet the needs of the new clients that will be looking for financial help – demand for advice is as strong as it’s ever been and across every age group.”
In our own businesses across The Wealth Network some of the massive changes bought about over recent years which have substantially increased our profitability are:
A change in rental circumstances. Covid almost did away with the need for fancy offices and meeting rooms. We are managing really well with client meetings via zoom and have downsized our office spaces leading to massive savings.
Successfully off-shoring our support team. Our staff expenses have lessened, our productivity has increased. Our staff are now more specialised and efficient.
Lower marketing costs. Although our marketing budgets have not changed, use of social media and amplified content strategies have enabled us to reach a far wider, yet a more targeted market than in years gone by. Basically our marketing dollar is being driver further and getting better results.
Our management process, run by a system of measurement, has introduced efficiency and discipline in getting problems solved and projects over the line.
A focus on creating an exceptional client experience has led to a steady stream of referrals.
Notwithstanding the current headwinds, I am an eternal optimist and a staunch believer that financial advisers can absolutely thrive in today’s market. I also think there are unique opportunities, particularly for start up businesses who have the chance to get their offering, their technology and their procedures right from the outset. So, I went looking for the silver linings in these reports. And here’s the good news.
Market Opportunities
(Research by Adviser Ratings – 2020 Australian Financial Advice Landscape )
Trust in advisers has doubled, emphasising the impact good advice can have on all Australians
There are more clients and fewer advisers. Whilst demand picked up in 2020, the supply of advisers to meet this demand is falling. Which means more business opportunities.