With financial advice under increasing scrutiny, the biggest challenge for accountants and financial advisers today is being able to deliver better advice to more clients in a scalable and compliant way. However, this is also their biggest opportunity.
Fewer than 20 per cent of Australians get professional financial advice,1 yet every working Australian has access to a legislated investment in their superannuation. Cost and trust are barriers to accessing services – and technology is already demonstrating its potential to deliver compliant, unbiased advice efficiently and cost-effectively.
For both accountants and financial advisers, there has never been a better time to address the current unmet needs, as well as the changing expectations of the next generation of business owners and retirees. But it may involve re-thinking your business model, team skills and systems first, while putting the client at the centre of everything that you do.
Changing role of the adviser
Macquarie’s 2018 Accounting and Financial Services benchmarking report revealed an interesting split in how the industry perceives its own future. While 96 per cent agree the role of the adviser is changing, one-third of survey respondents said they believe the firm of the future will be a specialist practice, with connections to other advisers.2
The other two-thirds saw it more as a client-centric model: a multi-disciplinary practice serving the full spectrum of client needs, with a higher proportion of client-facing staff supported by technology. They may provide a range of advice within their practice, potentially extending to legal services, insurance broking or commercial lending, or they find a way to provide that through a robust network.
“Clients increasingly expect a more holistic service, but they won’t trade that for expertise or professionalism,” explains Jason Phillips, Founder of JNP Advisory. “They’re more discerning about the advice provided, and the next generation of investors and business owners are also more knowledgeable and willing to do their own research.”
Referrals to allied providers may not be enough to retain clients. If you offer all the services related to their primary financial needs – from tax and wealth to estate planning – clients will have little incentive to leave. And we are already seeing this ‘entanglement’ lead to higher business valuations.
Client experience is now central
Client experience has already emerged as a primary market differentiator across all industries – and financial advice is no exception. But from a client’s perspective, experience is defined by major life stages rather than technical specialisation.
They’re more likely to be worried about ensuring they have enough cash flow for important business or life decisions – rather than ‘tax planning’ or ‘setting up a self-managed super fund’. So how do you build engagement and confidence at every stage of that journey?
One way is to provide hyper-responsive support – such as fast access to answers or information through a centralised client communication portal, where any adviser could respond. Or, providing clients with their own central dashboard, bringing their personal and business data together in one visible and engaging platform.
As well as these tools, ensuring your staff have the empathy and relationship skills to manage higher value conversations will also be critical.
“It all starts with getting the basics right: what is your core value proposition, and what are your target markets?” says Phillips. “Then invest in the systems to cost-effectively deliver best practice advice and increase the spectrum of services on offer so you can meet the growing needs of your clients.”
Client experience is now central
Technology powers compliance, at scale
With increasing regulatory controls and professional training requirements, the only way to ensure compliance without compromising productivity is to use new technology.
“Technology is lowering the cost of delivering accounting services and advice, and will also enable adjacent players to offer financial product placement through robo-advice tools,” comments Phillips. “But communication tools are increasingly important, in how you engage with time-poor clients.”
Cloud-based platforms with smart algorithms have already automated so many back office functions. Accounting software can allocate transactions in real time, and systems can automate fee disclosure statements or generate a Statement of Advice in seconds rather than hours, manually. Firms that are unable to integrate live data feeds – manually entering client data from a USB or Dropbox, for example – are disadvantaging their staff and their clients.
Think differently about client needs and expectations
Self-service is increasingly becoming the norm, from straightforward individual tax returns through the ATO’s portal to digital advice platforms. The next generation of business owners and investors expect online tools to run every day processes intuitively for them – but still need trusted advisers to provide tailored, higher value advice.
According to Macquarie benchmarking, only one in eight firms have created a service package tailored to younger client needs.3 Consider reaching out to the adult children of current clients, or asking your younger advisers and accountants to engage their own networks.
Think differently about the talent in your teams
Thanks to technology automating a lot of the back office and providing technical answers in a few clicks, paraplanners and bookkeepers have more time to provide better client outcomes.
Meanwhile, the shift for crunching numbers has evolved into data science: the ability to analyse client data to provide valuable, proactive insights into where the advice gaps might be.
The adviser of the future will also need stronger relationships skills, and resilience and adaptability to change. Finding talent with the right cultural fit is important, but you can also give your back office staff the opportunity to develop these skills by involving them in client meetings, from preparation to follow up.
Test out technology to find the right fit
Without technology, your business is not only risking improved efficiency and client experience – your business valuation is under threat. Macquarie has already seen a number of firms unable to execute a business sale as a result of poor record-keeping and systems.
At the very least, accounting and financial services firms need a CRM (customer relationship management) system and data aggregation tools. Very few have shown they can use client data to provide a truly personalised experience – and we believe this will be one of the most important differentiators for accountants and financial advisers in the future.
A strategy for growth
Businesses are operating in a completely new landscape, dealing with uncertainty, volatility and an accelerated momentum of technological change. And that may mean re-thinking the way you define your strategy.
In 2000, McKinsey defined three horizons of growth based on the maturity and relative risk of different types of projects.^ We believe this is a useful way to describe the three growth initiatives that will need to happen concurrently in order to sustain business growth in this changing business landscape.
Re-frame your perspective
This is a time of opportunity, not threat. We believe business owners are in a strong position to thrive.
To grow sustainably and profitably, it’s important to acknowledge that traditional rules no longer apply. Business models have been democratised and boundaries have dissolved. Customer expectations are driving the pace of change.
Consider your innovation model and mindset, the broader business ecosystem you can tap into, and the capabilities you need to put in place.
We trust you found this report informative and insightful, and we’d be happy to continue the conversation with you.