Financial advisers need to embrace change in their businesses and advice models to continue building the demand for financial advice and to stave off new competitors according to Association of Financial Advisers, Chief Executive Brad Fox.
Addressing the opening session at the recent AFA National Advisers Conference in Canberra, Fox said the evidence for a shift having already taken place in advice was the ongoing squeezing of margins for advice, products and services but advisers were able to respond to this shift.
“The evidence is there in the squeeze on margins, whether that is in advice practices, for self-employed advisers, on platforms, on life insurance or on managed funds,” Fox said.
“There is a margin squeeze which is clear evidence of when the current advice paradigm is being disrupted by a combination of new entrants, new market conditions and it requires new solutions and probably new business models.”
“The challenge is there to grow the market and increase the demand and the number of people who want help from professional people…”
Fox pointed conference attendees towards the idea of adaptive change which both recognises the shift in advice and offers a solution drawn from the collective experience and efforts of advisers.
“The soluton is about collaborating amongst your peers and experimenting, keeping the best of what you have today and blending it with the best of what will work for the future,” Fox said.
“Adaptive change recognises that it is not easy to see exactly what it is we are going to have to change to be but the theory is that through fast feedback loops, experimenting, sharing your results with your peers we can discover it faster and keep you ahead of the competition,” he added.
Fox said the nature of change itself was hard in many cases and could impact an advisers sense of certainty in their work, their sense of autonomy and direction as well as a sense of fairness.
“Change challenges your identity because the longer you have been doing this the more successful you have been and the more all those things have been wrapped together. However, adaptive change encourages you to attempt change, not alone, but with your peers.” Fox said.
“We are talking about this because the greatest challenge for every market is to grow demand. And we have been talking about 2 in 5 Australians getting financial advice since 2010 and not much has changed,” he added.
“The challenge is there to grow the market and increase the demand and the number of people who want help from professional people like you,” Fox told attendees.
