I have watched with interest the industry reaction to the Royal Commission, as we see banks start to divest of their wealth arms and distance themselves from advice and investing.
We will truly see a new landscape over the coming two to three years, with more change happening now than has happened in the last decade. While nobody can entirely predict the future, after talking to business leaders, researchers, and leading advisers, I think it’s clear things will look very different. I believe there are at least five key ways the industry will evolve. There are many who can gain from this change if they are ready and well positioned.
Distribution of investment products will be disrupted.
While advisers will still be a main component of the all-important relationship between end investor and fund manager, post Royal Commission there will be a bigger focus on fees and who investors are paying them to. Traditional costs like platform and advice will be questioned more, and savvy investors will be looking to save. Those with direct relationships will prosper as they cut out the middle men in fees.
Advisers will be redefining their own businesses.
With big houses looking to rationalise and change their relationships with licensees, more advisers will be looking at independent licensing or changing the way we work with licences. This is a massive opportunity for licensee groups to hone their proposition and possibly even lower their cost to serve in some cases.
Education will be a top priority for advisers.
Not just getting the required standard from FASEA, but doing CPD that is meaningful and adds value to their practice. Boring, standard CPD to just tick the box will be a thing of the past in this new adviser mindset. Every second spent learning will have to be made to count.
Direct investors will want easy entry points.
Apps like Raiz have seen people come to investing in a way they have not in the past. Managers who want to capitalise on technology becoming a profitable distribution force will be working on this now – the future is close and those who delay will be left behind.
Communications and transparency will be king.
The lack of trust created by the scandal of Royal Commission means anyone wanting to deal with direct investors will need to significantly lift their voice to market and take on subjects they have not in the past. Trust is built with honesty and authenticity – not the trademark of most finance communications in the past. It will be an interesting time to be working in marketing/communications as the challenge to create trust will be bigger than ever before.
While I could write for days on this subject, this top five list is just the beginning. I for one am excited to be working on this new frontier. While change is hard it is also usually good and, for those that grasp the opportunity to run toward a new world order, there is plenty to look forward.
I look forward to taking the journey with you.
Until next time,
Vanessa
