Change Brings Opportunity

In the first of two CPD articles, we look at what changes the financial advice sector is expected to experience in the short-to-medium term, while in the second article, Steve Craig of BT offers a timely reminder on how advisers can step up to help their clients feel more confident in these challenging times…


Renaissance: Five Steps for a Successful Advice Future


A new report says the industry is currently in a “unique position” to transform and rebuild itself as a reliable and integral aspect of the future of financial services in Australia…


The Oliver Wyman report, Future of Financial Advice: The Australian Renaissance, says that while some observers have commented on the collapse of the industry, learnings from other markets and industries suggest that the current period represents “an opportunity for rebuilding a sector that better meets customer and regulatory outcomes and is economically sustainable”.

One of the report’s authors, Oliver Wyman partner Angat Sandhu, told Riskinfo that financial advice organisations should reassess how they create a more sustainable sector for themselves and for their customers.

This means a change in the customer experience, in customer management and greater use of customer data.

“Firstly, they must understand their customers better, secondly segment them better and thirdly understand their customers’ needs over time in a more meaningful manner.”

Sandhu said it was important that advisers ask themselves to what extent they actually do understand customers’ needs, not just when they engage with them – but to what extent do they understand their changing needs over time?

“If you sample some customers and ask for feedback, will they be engaged, happy and understand the value you are providing?”

He adds that a practical challenge is that smaller advice firms may not have access to the data or the data infrastructure they need and should look at who they could partner with to help address this issue.

Another challenge for the advice sector is to articulate the value it provides to clients.

In looking at the evolution of the sector in the United Kingdom and the United States the report says the key takeaways for the Australian financial advice market include:

  • Regulatory changes and consumer demand for impartial advice will further catalyse the growth of Australia’s IFA sector
  • Similar to what has happened in the UK, scalable financial advice models will likely leverage digital technologies to improve the experience offered to customers, while also reducing service costs and compliance burdens

Its market outlook says the broader wealth management market remains in a state of flux with ongoing regulatory reform, changing consumer expectations and the evolving competitive dynamics in the sector. “The exact outlook and timing is uncertain but we expect the market and its participants to evolve in multiple ways.”

The market outlook for advisers includes:

  • Further consolidation resulting in a small number of larger players dominating the market, with favourable profitability and valuations, and greater opportunities to invest in new technology, attract talent, diversify revenue, and access capital
  • Decline in adviser numbers by a further 10 to 15 percent as more tenured advisers exit the industry in the short term
  • Rise of the smaller independent financial adviser firms offering specific value propositions as non-conflicted advice becomes more sought after

As to advice models the report points to:

  • Greater availability of tiered advice offerings, giving customers greater choice
  • Rise of digital direct to consumer and hybrid models to meet the needs of both the affluent and mass segments

The report also highlights potential competition for the IFA sector including:

  • Injection of private equity capital into the sector to help professionalise and uplift efficiency
  • Industry funds reassessing how they meet their members’ needs particularly as a large proportion of those age and have more complex needs
  • The ability of banks in the long term to identify how best to help their large customer bases with broader financial wellness needs that could benefit from “guidance” and “advice” offerings conducted in a low-risk manner
  • Accelerated growth in smaller technology enabled start-ups targeting niche, but highly valued, advice offerings that will disrupt the market

The Oliver Wyman report says it expects the future advice ecosystem to be more targeted for different customer segments, more diverse in terms of industry participants as well as usage of different advice models. The diagram below outlines the evolution of the advice sector expected between now and 2025.

Five actions for financial advisers

The report says that rather than a threat, the evolving market structure should be seen as “a significant opportunity for the financial advice sector to reposition itself as necessary and reliable for consumers financial well-being”.

It states that the priority focus of advisers should be to develop ways to restore the trust gap in the short term in order to secure and build from existing client bases, as well as comply with changing regulatory expectations. In parallel, it says, there are five actions to pursue to position successfully in the future sector structure:

Action One: Prioritised Segment Focus

Establish a clear value proposition underpinned by a customer-first mindset; invest in understanding customer needs and re-start the process of transforming their service offerings. Advisers here need to go well beyond the traditional and static “fact-find” process to more holistically understanding their motivations and behaviours and doing so in a dynamic manner over time. “These customer-first capabilities are relatively new to the financial advice sector and will take time and different skillsets to embed.”

Action Two: Stratify Service Offerings

Align service propositions to specific customer segments, selecting priority segments to double down on and being the adviser of choice for those segments. Examples of these could include providing holistic advisory services to specific segments (retirees, young professionals in select industries/sectors, early-stage entrepreneurs etc.). For others, this will involve trying to provide a narrower range of services to a broader customer set. “This can only be effectively done by first better understanding your customer set and subsequently critically assessing where your competitive advantage lies.”

Action Three: Code Data Within DNA

Develop a detailed data footprint about customers at every point of interaction, taking advantage of open-data to enable a better understanding of their ever-evolving needs and so a better alignment of service offerings. “Similar to customer-first, this is another capability that is in its infancy in the financial advice sector but critical for its future success.”

Action Four: Uplift Technological Capabilities

Embrace developments in Regtech across Australia by utilising technology to reduce costs, while simultaneously improving compliance. Similarly, using technology to increase connectivity and engagement with clients, especially in a post- Covid environment.

Action Five: Partner orchestration

Take advantage of technology to orchestrate partnerships across the advice value chain, including integration into digital ecosystems via APIs to enable a seamless customer experience. “This will become critical especially for firms that aim to meet a broader set of customer needs and/or realise there are others that can provide select services at lower cost and better quality,” the report states.

Angat Sandhu is a Partner in Oliver Wyman’s Financial Services practice in Australia and leads the firm’s Insurance practice across Asia Pacific…


Three Simple Ways to Bring Client Relationships Back to Life


With our thanks to BT’s Steve Craig, this article serves as a reminder during these strange and changing times about how advisers can take three simple steps to demonstrate the value that their advice provides to their existing and future clients…


During uncertain times, and as people tighten their purse strings, it can be even more challenging to demonstrate the value of advice to existing and prospective clients. On top of that, social distancing requirements during Covid have generated additional hurdles for many advisers, who in the past heavily relied on face-to-face interactions to strengthen relationships, create new connections, and uncover client needs.

Despite the changed circumstances, building and nurturing long-term relationships with clients remains one of the most effective and affordable ways to grow your business. The tools and tactics may need to be modified, yet the basic principles remain the same. Even if Covid has forever changed how we do business and how consumers behave, engaging clients is still achievable by setting up positive emotional connections and spreading the word about what you do, and reminding clients of the value you can deliver.

1. Understand what value means to each client, and deliver

As the Financial Planning Association has pointed out, advice can have both tangible and intangible value.[1] Tangible value can include saving money by enjoying a discount on life insurance premiums. Intangible value is the peace of mind factor for clients: knowing they have enough cover to protect themselves and loved ones, should the unexpected happen, and that a professional is helping them to assess their changing needs.

Tangible value is easy enough to calculate as often it has a dollar value. BT’s Financial Health Index survey results provide some tangible measures for the intangible value of advice: the majority of Australians who currently have a financial adviser believe they have an appropriate amount of cover (76%), compared to 29% for those who have never engaged an adviser.

Furthermore, among those who hold life insurance, 87% of advised Australians are confident that they will be able to continue paying for their insurance, while the percentage amongst those who are not advised is significantly lower, at 71%. These results are indicative of the value of sound financial advice – those who receive advice are more likely to believe they have the appropriate amount of cover and type of insurance, and that they can afford it.[2]

What your clients perceive as the most valuable aspect of your advice will depend on their particular situation. Some will be more price-driven, while others may appreciate your ability to help them address their concerns about having the right amount of cover.

The important thing to remember is that your marketing activities demonstrate both the tangible and intangible value of your advice – and that your messages appeal to your target audience. This may mean tailoring your approach depending on who you’re trying to reach.

2. Make plans to network, increase your profile and check in with clients

At the time of writing this article, the first batch of Covid-19 vaccines were being rolled out in Australia. While it may take some time yet for things to really return to “normal”, now may be the time to start planning how you can meet with prospective clients.

This could mean checking whether traditional networking events, which might have been postponed during 2020, are now back on the calendar. Another activity you could do now is build more professional alliances that will provide you with a way to meet new clients who match your value proposition.

If you have considered running insurance education programs for clients through seminars, or taking on public speaking opportunities to talk about a subject that you’re passionate and knowledgeable about, you could brush up on your presentation skills and create or update your materials. At BT, our business development team have found webinars provide easy and effective ways to connect and provide information.

Remember to nurture your connections with existing clients too. You can do this by celebrating and marking important milestones or anniversaries through a phone call or email – with a note that you are looking forward to meeting with them in person again soon. If the subject of navigating Internet banking and superannuation platforms during Covid comes up in conversation, following up with helpful tips may be appropriate, especially among older clients who are more used to managing their finances in person.

3. Connect via social media

Along with learning how to do video conferencing effectively, social media skills have been essential for businesses during Covid.

Australians are avid users of social media, with around 80% saying that they visit social media sites at least once a day. One in four Australians use social media to research products and services of interest; and when Aussies do their research on social media, it often leads to them making a purchase (61%).[3] Amongst Boomers Facebook is the most popular social network (with 86% using Facebook),[4] and many ask for personal recommendations from their trusted circles.

If you don’t have one already, create a social media strategy that’s part of your overall marketing strategy and use it consistently. Ensure your posts are relevant and engaging and showcase your expertise. Most of all, ensure your posts are authentic to you.

At BT, our business development team connect with their contacts on LinkedIn, using posts that contain content which advisers may be interested in, such as technical knowledge, industry education and regulatory updates. Many of the articles we share offer value for advisers, by helping them keep abreast of changes and enabling them to gain CPD points. Social media channels can also be a way to share special offers and discounts, such as our campaign promoting a 25% discount off premiums for the first year.[5] Getting started on social media can be as simple as re-posting content from BT, Riskinfo and other trusted sources – and we all appreciate the bump in our social engagement.

Despite the need to practise new skills, pivot our business models, and reflect on how we can deliver value in different ways, success in business is still largely dependent on our ability to build relationships, demonstrate relevant value, and maintain a strong presence in our markets.

[1] Financial Planning Association blog, Show me the value! October 2014.
[2] Survey conducted from October to December 2020.
[3] Sensis 2020 Yellow Social Media Report.
[4] Roy Morgan media release: Facebook and YouTube strong across all generations but Pinterest, Instagram and TikTok have important user bases, 16 April 2020.
[5] For new stepped premium BT Protection Plans lump sum policies. Full terms and conditions.


The information provided is factual only and does not constitute financial product advice. Before acting on it, you should seek independent advice about its appropriateness to your objectives, financial situation and needs.

Any information in this article which has been derived from third party sources is believed to be accurate at its issue date. The Westpac Group accepts no responsibility for the accuracy or completeness of, nor does it endorse any such third party material. To the maximum extent permitted by law, we intend by this notice to exclude liability for this third party material.

© BT – Part of Westpac Banking Corporation.
Steve Craig is Head of Adviser Distribution, Life Insurance, BT…



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