There is no denying it’s been a tough few years for financial planners. The fact that more than 6,800 have now left the industry is evidence of just that.
There is, however, a silver lining emerging for those planners running and owning their own practices – whether independently licensed or via a larger dealer group – and that is the ability to make more profit.
COVID-19, for all the hardship it is has caused, has created an environment that may just make advisers’ businesses more profitable, and their compliance and commute workload easier.
That environment is, of course, working from home and making use of technology. More than many other professionals, planners have embraced this wholeheartedly, and many reports suggest they have been in even more contact with clients than ever via video conferencing and working from home.
Naturally, profiting from this new environment won’t be an immediate outcome. Those with locked-in contracts on premises will need to look at how quickly they can change their model to keep their overheads low.
It’s always been a fact that financial planning carries a lot of hard costs due to things like compliance, and the cost of even opening a single client file (which can range from a reported $3,000 to $11,000). Nice offices that reassure the client, and the need to have face-to-face meetings, with only so many hours in a day, has always meant that clients needed to have considerable funds to be able to meet the fees planners charge to run profitable businesses.
This new working environment, however, means planners may be able to cut costs in a number of ways. And cutting overheads moving forward is probably the only way many of us are going to be able to make a profit – rather than increasing costs to clients, which is not realistic.
In a Zoom meeting with my adviser this week, he appeared in a very cool stone floor and wood office. I was immediate impressed and asked him where he was. He was, in fact, at home, and the background was a Zoom template.
He asked me if I’d rather see him in a real office and my immediate answer was no. He looked incredibly professional where he was, and of course he was happier as he was closer to his three kids and working from home.
It then occurred to me how much he could save if he were to permanently give up his premises. Not only rent costs, but travel, electricity, and perhaps even a PA to answer the phones and make the office work. Another bonus was that he was now using Iress technology via Xplan, which recorded his video meetings with clients and filed them as compliance meetings.
To me, this was an incredibly exciting step forward. At least 15-20% of costs on overheads could be wiped out if advisers can successfully navigate this process and permanently work from home.
While I understand working from home is not always ideal, there are plenty of opportunities to meet clients when times are better after COVID – in coffee shops and shared working spaces, for example. And with more profitable businesses all round, there will likely be more capacity to take the larger clients to lunch and really grow long-term relationships and friendships.
While we all face hard times ahead economically, I do hope many advisers can take advantage of the ability to lower their overheads and create more profitable practices. The work you do is essential and you deserve financial reward.
Until next time,
The opinions expressed in this content are those of the author shown, and do not necessarily represent those of No More Practice Education Pty Ltd or its related entities. All content is intended for a professional financial adviser audience only and does not constitute financial advice. To view our full terms and conditions, click here
New research shows Australians will be working longer than ever post-COV....
When I started NMP, the idea was helping advisers position their busines....