It's been an interesting time for planners, to say the least. The political lamenting over the lack of numbers of financial planners has been somewhat ironic, considering everything that has come before.
According to Adviser Ratings, over 6000 advisers have now left the industry, deciding the new education standards and exams were too much to take on. Many of them decided instead to take on early retirement.
There are some green shoots, however. For the first time, there has been a concerted effort to try and drive the cost of financial advice down and make it more accessible. And anyone that runs a financial planning business knows that the cost savings cannot come from fees charged. The cost of giving advice, and the compliance attached, is just too expensive to even consider lowering the fee for service.
So the next step is looking at what type of advice to give, and whether some red tape can be cut around more basic advice. And, as it happens, the majority of Australians really need quite basic advice. Their super, their retirement age, the tax implications and social security - this type of advice can be invaluable to someone in the planning phase, and people will increasingly turn to their super fund to help them address these issues.
This leaves advisers with clients who pay a fee for service, and understand the value for that, which allows advisers to focus on driving their own business costs down to increase their profits. While comprehensive advice may never be free of the compliance levels attached now, the costs associated with delivering it can be lowered.
COVID-19 has given everyone a new way of working from home - and some people are realising that they may never go back to the way it was before. So taking planner premises out, and even outsourcing paraplanning rather than having staff on site, can take serious costs (up to 30%) out of a planners’ outgoings.
The other facet of the business that can help drive down costs is technology. Our expert from Deloitte in our latest season of After Hours talked about the simple things planners can do to ensure their home office is secure. And Iress CTO Andrew Walsh explains all the upgrades they are making to Xplan, such as making video the source of compliance notes from online client meetings.
Online meetings now being the norm, and home offices cutting out costs, plus outsourcing administration, are significant cost savings for advisers. While it may be hard to realise these savings with overheads that are still contracted, when it comes time to renew leases or look at staffing and tech policies, planners have a real opportunity to view overhead reductions as their most significant way to increase profit.
Because after all, profitable planners means successful clients. A win-win situation.
Until next time,
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