The key challenge for financial advisers is not FoFA reforms, but rather the need to bridge the gap between what consumers will pay for advice and the value of the advice that is delivered, according to ANZ’s General Manager Advice & Distribution, Paul Barrett.
In a briefing to the media, Mr Barrett outlined three major areas of focus for ANZ’s aligned and banking advice networks in a post FoFA environment:
- Knowledge
- Efficiency
- Innovation
In outlining the rationale behind each of these areas of focus, Mr Barrett highlighted the area of Efficiency as a key factor in resolving what he refers to as the ‘advice value dilemma’ facing the financial services industry.
Citing previous research, Mr Barrett says that, on average, a consumer is prepared to pay around $300 for financial advice. However, the cost of providing a fully holistic client advice solution has been estimated to range between $1,400 and $3,000.
Mr Barrett says the gap between perceived and actual value of advice is currently addressed by volume bonuses and ongoing commission arrangements, both of which will be significantly impacted by FoFA reforms.
He believes new efficiencies will be the practical answer to solving the advice value dilemma in a post FoFA world, and that those efficiences relate to:
- The nature of the advice to be provided
- How that advice is delivered
… not all consumers want or need a ‘one size fits all’ approach
In terms of the nature of future advice, Mr Barrett says the industry should embrace with open arms the opportunity under FoFA to deliver scalable advice. He contends that not all consumers want or need a ‘one size fits all’ approach and that many consumers have not engaged with planners because of this. He says a more simple, efficient approach is needed, which will allow a segmented delivery of advice as appropriate for the client’s needs.
Delivering that advice needs to include greater time and cost efficiencies, according to Mr Barrett, who outlined a new telephone advice service as an example of how this can be achieved. In this phone-based advice model, currently being piloted, clients are telephoned by qualified advice staff on behalf of the adviser. They will be able to deliver ‘real time’ advice, says Mr Barrett, on a range of issues, particularly under a scaled advice model. But if the client’s needs are more holistic, they will be referred back to the adviser.
Importantly, Mr Barrett said this solution was one that has been sought by advisers themselves within the ANZ/OnePath aligned dealer groups such as Milennium3, RI Advice and Financial Services Partners, who are seeking efficiency gains to ensure they are able to manage their practices post FoFA (see also: OnePath Launches Next Phase of FoFA Support for Advisers).
Mr Barrett outlined seven priorities which, between them, would variously address the three main areas of Knowledge, Efficiency and Innovation:
- Organic growth. Growing the ANZ Bank advice network by a net 50 advisers per year, initially looking to ANZ’s pool of 10,000 staff for those seeking career progression in this area.
- Also growing ANZ’s non bank financial planning businesses
- Business growth within the independent financial adviser sector, with a far more tailored and segmented approach to the ANZ/OnePath proposition
- Investment in the delivery of advice, which will introduce a next generation of improved, efficient dealership services (eg the phone-based scalable advice)
- New initiatives across the board, designed to innovate and add value to existing advice models
- Working with advisers and dealerships to assist them to navigate through the regulatory reform process
- Develop a unified culture within the former ING, now OnePath, businesses and ANZ advice networks that will drive success
