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Get your business on track for 2016

Good Returns asked the experts: What should advisers' New Year's resolutions be?

Thursday, December 31st 2015, 6:00AM 1 Comment

by Susan Edmunds

Michael Dowling, president, Institute of Financial Advisers:

Understand what it costs for you to deliver advice to your clients, so you know when you are doing profitable work or charity work. That is to say - it is okay to work for clients at your cost, but if you do it all the time you will go broke.

Mike Moore, Mike Moore Marketing:

When I go into the New Year I choose just one thing that is going to be better this year than last year.  Not half a dozen, not complicated, just something simple. For an adviser the critical issue is are they going to go forward or backwards next year? If it is forward, what is the one thing that will make that happen? More customers, different fee structure, cost reductions, buy or sell?

Write it down and then put it away and have a wonderful break.Pick it up in the New Year and make it happen. For me it is to help more people grow their practice, to do that I need more sellers, as we have plenty of buyers. Therefore the one thing we are going to do next year is track down everyone that does not have their practice exactly the way they want it and recommend that they sell off those clients that do not fit their profile.

Rod Severn, PAA:

A key phrase for 2016 is proactive participation. Proactive advisers will reap the benefits of their forward thinking in 2016. The FAA review has and will continue to prompt many advisers to consider their views in regards to sales versus advice, qualification standards and minimum levels of accreditation, disclosure statements and ethical standards for all advisers - amongst other bar-setting themes we have all been discussing of late. Change is coming:  while the nature and application of that change is still up for discussion, advisers who embrace the evolving nature of the industry and/or get involved through their professional bodies, will be ahead of the curve.

David Whyte, DCW Management:

Look carefully at what builds equity value in your business; consider what defines that value to a potential successor/purchaser; take steps to develop a strategy that records progress in building that value.

Claire Matthews, Massey University:

All advisers should think about taking on an “apprentice” for the benefit of the profession and themselves.  There is a lack of financial advisers, and if there are no opportunities for new advisers to join the profession the sector will shrink - and that may mean there will be no one to buy their book when they want to retire.

Ralph Stewart, Retirement Income Group:

1. Read The World In 2016 by The Economist magazine. They publish their projections in December each year for the year ahead. The magazine is not high-brow and easy to read and really challenges convention from business to culture. It really makes you think about what we do, how we do it and why we do it.

2. We all know the property market truism - location, location, location. I would argue our equivalent is independence, independence and independence, which is critical to the advice industry.

3. Living and breathing independence in the way the advice industry charges, behaves, communicates and presents itself is so important.

4. Product suppliers (our business included) must deliver products at lower costs, shift more market risk from the client’s balance sheet to ours and in turn provide more certainty to the advice industry.

5. The need for advice is apparent particularly in immediate and post-retirement products. If we are going to win our share of this opportunity we need to get way smarter about living in retirement and worry less about investing in retirement. Roboadvice can do this clearly and efficiently but can't deliver the empathy and support needed to manage 30-plus years of ageing.

6. It’s easy for me to say and to be fair our new business is arguably the most regulated provider operating today. But the regulator is our friend not the enemy. If we really believe in client-first we are all on the same side. The seemingly unreasonable compliance requirements placed on us is because of lack of trust, we should be able recover this and acknowledge the past is not our friend but the future can be.

7. Business operates in cycles and we are deluded if we don't know that, it's early days but advice is back with the tail wind of lower interest rates in the southern hemisphere and higher in the north. Let's offer rational solutions for a lower interest rate environment that are not dependent on unrealistic headline-grabbing rates of return. Well managed portfolios will beat bank security but sensible outcomes are not 10% better.

Michael Naylor, Massey University:

I'm working on a detailed report on how the insurance world is about to be blown apart by technological changes.

For advisers this manifests in roboadvice, which are basically smart programs.

These will take away nearly all the areas of an adviser's job or business which involve routine administration or generic advice. The industry still has little concept of how good these advice software programs will become, at a geometric scale.

Taking a lead from the impact of Xero on accounting, where bookkeeping and reporting has nearly disappeared but strategic business advising has not, then:
The motto is - if an aspect can be reduced to programmable rules then it will disappear in the next five years or so.

Advisers need to expand the financial advice part of their business, which involves household behavioural finance aspects, or business strategy. Whatever advanced software does, it will not immediately replace the human touch, the persuasive effect of a good adviser ensuring that clients do the hard things which are in their own long-term interest.

From an adviser business angle - advisers need to routinise as much of their business as possible so that admin staff do as much admin work as possible, and then eventually these aspects can be replaced by software. The adviser focuses on face-time with clients.




Tags: financial advisers

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Comments from our readers

On 7 January 2016 at 11:52 am perold12 said:
Agree with the above comments and we need to accept and embrace regulatory change. Our reality is that we are too important an industry to fail and the only tool that the regulator has to protect all parties is regulation so accept it, as there will be more to come.

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AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 3.85
ANZ Special - 2.65 2.75 3.35
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
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China Construction Bank Special - 2.65 2.65 2.80
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Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
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HSBC Premier 4.49 2.60 2.65 2.80
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HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
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Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
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The Co-operative Bank - Standard 4.40 3.29 3.29 3.89
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