Ahead of last week’s major announcement of the Government’s comprehensive financial advice reform package, professional advisory company AZ NGA had come up with its own blueprint for the future of financial advice.
The company says the only way the advice industry can achieve its mission and purpose to financially prepare Australians for the future “…is by raising an army of large, corporatised super firms.”
In a paper entitled Ready or Not? A guide to building a Super firm, AZ NGA says the industry’s current structure and composition is holding it back from reaching the 12.4 million Australians who need professional advice but aren’t receiving it “…signalling the urgent need for a stepped change.”
Paul Barrett, CEO of AZ NGA and the paper’s author notes that while SMEs play an important role in the advice eco-system “…the unmet advice needs of Australians demands a different approach and a new category of super firm that is akin to the mid-tier in accounting and professional services.”
He says if the advice industry’s purpose “…is to help people get their financial affairs in order and, ultimately, achieve their goals then players need to supercharge their capability and capacity to see more clients and that means getting significantly bigger.
…we believe that size and scale create opportunities for businesses to offer a broader, deeper range of services…
“While small specialised business can do well too, we believe that size and scale create opportunities for businesses to offer a broader, deeper range of services and enhance their employee value proposition to include career opportunities. It also gives a firm’s people, business partners and clients greater confidence that it will be around for the long-term.”
The paper claims the blueprint for a super firm is based on five essential components:
- A compelling employee value proposition
- Client value proposition
- Shareholder value proposition
- A defined enterprise architecture
- A healthy corporate culture
Barrett says that to create a super firm, advisers and business owners must fuse together the things that SMEs do really well with the things that only big businesses can do.
“As advice businesses grow and increase in size, smaller firms will struggle to deliver a compelling proposition for employees, clients and shareholders relative to larger, better-resourced counterparts.”
Barrett says around 15 firms in the AZ NGA network had committed to pursuing and executing a super firm strategy over the next three to five years.
For the majority, that strategy included a combination of organic growth and M&A, he says, citing the recent acquisition of Australian Unity’s Financial Advice business by AZ NGA-backed Nestworth Financial Strategists in partnership with Fortnum Private Wealth (see: Australian Unity Sells Advice Business).
“We have so much conviction that advice businesses need to scale up and get bigger that building and investing in super firms has become a key plank in our refreshed strategy,” Barrett says.
