Articles

5 top tips if you are considering merging your financial planning practice

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This article also appeared in ifa.

Pressure to scale up and grow continues to increase with many financial planning practices fighting tooth and nail to operate sustainably for the future.

Many practices have struggled to meet their expectations of growth and client profitability over the past few years. This is due to the ongoing legislative upheaval, the increased cost of providing advice, and the distraction and disruption wrought by the global pandemic. 

Many practice owners that have gone it alone over the past few years feel exhausted and isolated, and are looking for ways to either generate growth, such as buying small client books, or potentially seeking to merge with like-minded practices, often with the encouragement of their licensee. 

It is important to carefully consider the implications of merging your practice, and ensure that at the end of the day, the merge is not only in the best interests of your clients, but also aligns with your core beliefs and the culture of your practice. 

Here are five tips to consider if you are thinking about merging your financial planning practice:

  1. Take the time to clearly understand what your medium to long-term objectives are for your practice. A merge with another practice might satisfy your short-term needs, however, in the medium and long term, you might find that it constrains how your practice will evolve and change.
  2. Understand the cultural fit. Don’t just pay lip service and agree on broad principles. It takes time to get to know each other and understand the differences and commonalities of each business. Your values should be aligned, and this is best understood by spending time together and witnessing them in practice.
  3. How much upheaval will the merger cause to both your clients, but also your team? If the practice you are seeking to merge with, is with another licensee, what hoops will you need to jump through if the merged business decides to maintain the alternative licensee? Of course, often, change is a positive; if the new licensee offers more efficient solutions, however, it pays to understand if the merge will benefit your business or potentially hinder it.
  4. Alignment in terms of your ideal client is critical. Synergy and efficiency can be gained by consolidating a service and approach which is tailored for a specific type of client. Alternatively, your ideal client profile might complement the merging practice which could potentially create new business opportunities. For example, if one practice focuses on late-stage accumulators, and the merging practice has an aged care focus, there could be potential for these accumulators to be supported in the aged care advice support for their elderly parents.
  5. Always have an agreed exit strategy and enter any merger with your eyes wide open. Commit to making it work but ensure that your clients and team are always at the front of your mind. 

Like most big business decisions, merging your practice requires careful consideration and in-depth due diligence to ensure that the decision you make is the best one for you, your clients, and your team. Reach out to those that have been in your shoes before and understand the lessons they learnt through the process. Understand if it is the right next step for you, and back yourself!

Michael Gershkov, national practice manager (VIC), Lifespan Financial Planning

Considerations for superannuation recontribution strategies

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This article also appeared in Money Management.

The recent changes introduced to superannuation contribution rules provide increased opportunities for cash out recontribution strategies. While the strategy aims to increase the tax-free portion of superannuation interest, there are important issues for financial advisers to consider. This article provides a summary of:

  • the cash out re-contribution strategy;
  • potential benefits;
  • important points to consider before recommending the strategy.

What are the recent changes to superannuation contribution rules?

In February 2022, The Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Bill 2021 (Bill) passed both houses of Parliament and received Royal Assent. The key superannuation measures in this Bill for individuals aged between 67 and 75 include:

  • Changing the work test requirement and extending the non-concessional contribution bring-forward rules effective 1 July 2022.

This means from 1 July 2022, individuals aged between 67 and 75[1] will be able to make non-concessional contributions to superannuation without having to meet the work test. These individuals will also be able to take advantage of the bring-forward arrangements and contribute up to $330,000 to superannuation in a single financial year (subject to their Total Superannuation Balance being below $1.48m on prior 30 June).

This change may open planning opportunities for older Australians including being able to cash out and re-contribute to super and ability to make non-concessional contributions post-age 67 without having to meet the work test.

Cash out re-contribution strategy

The cash out re-contribution strategy involves withdrawing some or all of the superannuation interest and re-contributing the amount as a non-concessional contribution. The amount withdrawn from superannuation is paid to the individual in accordance with proportioning rules, which is in proportion to existing taxable and tax-free components. When re-contributed to superannuation, the amount is allocated to the tax-free component of superannuation interest.

As such, the strategy may potentially convert some or all of the taxable component into a tax-free component. Ultimately, this may result in reduced tax payable if superannuation death benefits are paid to non-tax dependent beneficiaries (eg adult non-dependent children). 

Potential benefits of cash out re-contribution strategy

Benefits of the strategy include:

  • Increase in the tax-free component of superannuation interest.
  • Reduction in tax paid by non-dependent beneficiaries in the event of death.
  • If aged between preservation age and age 60, increase in tax-free component resulting in paying less tax on pension payments made prior to age 60.
  • Depending on income and other eligibility requirements, once the contribution is made the individual may qualify for Government co-contribution of up to $500.
  • Equalising superannuation balances for couples where the amount is withdrawn from one person’s superannuation and contributed into the other person’s superannuation account. By doing so, each person may be able to better manage their individual Transfer Balance Caps or Total Superannuation Balances. This may provide an opportunity to transfer more amount to pension or to make additional superannuation contributions.
  • Similarly, where one spouse is younger than the other, by withdrawing an amount from the older person’s superannuation and contributing to the younger person’s superannuation account, the couple may be able to access additional social security benefits while the younger person is below age pension age.
 
Article by Anna Mirzoyan, Compliance & Technical Officer, Lifespan Financial Planning
 

[1] Amounts contributed must be received no later than 28 days after the end of month in which they turned 75.

Lifespan National Conference Hobart 2022

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Here are two great highlight reels from the recent Lifespan National Conference, held  in Hobart 2022. 

This year’s event really was a breath of fresh air after the past couple of years; a chance to reflect on the past, focus on the now, and plan for the future. 

One of the many great benefits of being part of the Lifespan adviser community!

2021 A Year in Review

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Taking a look back at the highlights of 2021 for Lifespan Financial Planning, and the industry. 

We are nearly there. With 2021 rapidly coming to a close, it is worth reflecting on the challenges that we all faced this year, but also keep in mind, the hope that we all should have for the future of our emerging profession. This time last year, we couldn’t wait until the year had come to a close, believing that 2021 had to have much more in store for us than just legislative overwhelm and continued challenges in delivering advice affordability. Unfortunately, it probably didn’t live up to the hype!

But there were definitely some highlights for Lifespan Financial Planning, as showcased in this fabulous showreel.

You can also click here for this article, Reflections on 2021 by Eugene Ardino, as published in the Financial Standard.

Elevate your financial planning website – from electronic brochure to client engagement tool

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For a financial planning practice, your website is one of your most visible and valuable marketing assets. It is arguably the most important expression of your brand. As an expression of your brand, it is key that your website engages your preferred clients with a consistent brand voice.

Prashant Nagarajan, Financial Adviser and Co-founder of Finnacle, has recently undertaken a major website evolution. “It’s important to remember that your website development is not a set and forget scenario”. “The key driver for our website redevelopment was to make sure it talks to our prospects and clients in the same way we talk to them over the phone or when we catch up with them. Our website was doing a good job, but not as good as we do in person.”

A financial planning website should establish and build trust. Finding tangible proof you are real people and a real brand is a critical aspect of establishing trust, as is having a compelling and consistent message.

“Our website builds trust before our prospects pick up the phone. (This is really important as) 80% of the client decision making process is made before they call us.”

By elevating your website from simply verifying that you exist and provide certain services, to developing a website that speaks to and engages with your preferred clients in your brand voice, this enables you to leverage your position, generate high-quality leads and referrals, and dramatically improve your practices bottom line.

A recent study undertaken by Elixr Consulting found that advisers who service ‘anyone who asks for advice’ were quoting advice fees on average 37% less than advisers who identified preferred clients or target markets, AND their average EBIT (earnings before interest &tax) was 20% lower than those advisers who were more targeted in their approach.

“When we first started up, we focused on the 20-40 market, then researched looked at what the right problem was for them. Our research told us that the biggest issue for this demographic was first home buyers, and our market research narrowed that to 30-40 year olds”. Finnacle first looked at WHO we wanted to serve, then WHAT was the problem was that we could solve, and finally WHICH services we needed to provide in order to solve their problem.

“(Our website is) as much about saying no to the wrong people as saying yes to the right. If a 50 year old were to visit our site, I would be really surprised if they became a client. Our site is not designed for them – this is not your Collins Street office.”

Attention spans are shrinking, and visuals are the perfect medium through which to maximize the brief seconds websites have to establish a connection between company and consumer. Interactive content requires more hands-on engagement from a site visitor. With well-crafted headlines and approachable imagery, the millennial crowd is the obvious target audience here, and Finnacle’s writing style says as much as well. Finnacle know their audience, the questions that audience wants answered, and the intent behind their queries, all of which are hallmarks of a great digital marketing program.

The financial planning buying cycle can take a long time and many potential buyers encounter your firm long before they are ready to buy. So your website also needs to address prospects at every stage of the buying process, from awareness through consideration, and engagement. In between, a lot of nurturing goes on. It is important that a potential client can easily find relevant and timely information.

“Our website development focused on our ideal client user-based experience. If this is you, and this is what you want (to do/achieve), then this is what you need (to do)”. Each page has a specific objective and key results based on the customer journey.

The first step in the process of elevating your website from online brochure to client engagement tool is to clarify who your preferred clients are. Articulating who your preferred clients are allows potential clients to confirm, “Yes, you work with people like me”, or no you don’t! This also allows you to better understand who you are targeting, and talk in a language that reflects your brand, resonates with your preferred clients, and builds trust by demonstrating that you understand the issues they face. The better you know and understand your target market, and can address their needs, the more valuable and valued the service you will be able to provide.

Your website can be a valuable client engagement tool, and speak to the people that you want to work with.

Want to find out more? Listen to the podcast here, and contact the Lyndal and Lisa in the marketing team at Lifespan.

Aged care advice – it is time to have a solution

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This article also appears in ifa magazine.

As an adviser, it can all be overwhelming! Ongoing legislative and compliance change, continued pressure to meet education requirements, alongside the ever-present pressure of ensuring that your clients are happy, and they are receiving the professional, quality advice that they deserve.

The traditional advice model, where your practice represents a one-stop shop for all of your clients’ needs, is becoming increasingly difficult to deliver. There is just not enough time in the day to maintain the competency you need to advise across all areas of financial advice. With Standard 10, of the FASEA Code of Ethics requiring you to “develop, maintain and apply a high level of relevant knowledge and skill”, this becomes increasingly difficult to meet where your advice proposition is broad and multifaceted.

Aged care advice is one of those advice specialties that can present some difficulties when it comes to delivering a quality, compelling and profitable advice proposition for clients. You know that your clients will no doubt need it at some point, whether that be for themselves, their spouse, or possibly an ageing loved one, however, how do you manage that need once it arises?

Every financial adviser has a role to play when it comes to addressing the aged care needs of their clients. It is however up to them how they choose to manage these needs, in terms of their business model. It is not enough to simply avoid the conversation when it comes to planning for the cost of care as your client ages, and the FASEA Code of Ethics, Standard 6 further reinforces this, with the requirement to “actively consider the client’s broader, long-term interests and likely circumstances.” If you are advising pre-retiree and retiree clients, the discussion of planning for the cost of care becomes part and parcel of the conversations you have, addressing their needs and objectives as they progress through retirement.

It is critical to understand the importance of having meaningful conversations with your clients, discussing the life that they would like to live throughout their retirement years. This includes, for example, their plans to travel during their early years, right through to how they would like to access care and support as their health declines with age. Your role as an adviser is fundamental in raising the important issues around estate planning objectives, as well as how they would like to fund the cost of care. You do not need to be an aged care specialist to have these conversations, as they are an integral part of the retirement planning process.

So, what are the options available to advisers who are committed to addressing the aged care needs of their clients – whether that be right now, or in the future?

Option 1: Become an aged care specialist. The FPA has released an FPA Aged Care Specialist™ accreditation, and there is a range of courses that have been developed to build your competency and confidence in providing quality aged care advice.

Option 2: Establish an aged care specialist within your practice. The specialist might not be you, however, there might be an adviser in your business that takes a keen interest in, or has some experience providing aged care advice, that could prove a valuable service to your clients. You might even decide to set up a separate aged care brand, to which your practice refers to.  

Option 3: Connect with an aged care specialist and partner with them to provide the aged care service to your clients. This way, you can introduce the relationship, be involved in developing the objectives and outcomes, however, the specialist provides the aged care advice directly and ensures that you are kept in the loop regarding the process.

Option 4: Outsource aged care advice to a trusted expert. Undertake your due diligence and source an aged care specialist that can provide professional aged care advice to your clients when they need it. Position the value of this strategic advice to your clients, and make sure your clients are aware that you do have an aged care solution should they need it.

It has never been so important to have an aged care advice solution embedded within your advice practice. Exactly what that solution is, is up to you. With a solution in place, you can have the confidence to have meaningful conversations with your clients about how they would like to live throughout their retirement years and enable them the freedom to choose the right care solution for them, as they age.

You can listen to the Lifespan Live podcast “The time is now – Expert insights into how to develop an aged care advice solution for your clients” here.

Lisa Gregory, Marketing Development Manager, Lifespan Financial Planning

ifa Excellence Awards 2021 Dealer Group of the Year

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ifa Excellence Awards 2021 Dealer Group of the Year

We’re delighted to announce that the Lifespan group (Head Office and adviser network) won three awards in the recent 2021 IFA Excellence Awards, including the coveted Dealer Group of the Year! 

Lifespan CEO, Eugene Ardino was announced Dealer Group Executive of the Year, for the third consecutive year. Eugene commented, “I regard this as a recognition of everything the Lifespan team and community have achieved over the past year. To win this award in such a challenging year is humbling”. We are acutely aware that over the past 12 months the industry has suffered serious contraction, as many adviser groups and advisers have struggled to cope with both regulatory change and the unique difficulties presented by the pandemic. Thankfully, Lifespan has been able to adapt quickly and successfully to navigate these challenges, and continue to support our advisers.

More importantly, we had a strong presence as a group in finalist nominations for these awards, being represented across 13 categories. This demonstrates the quality of advice firms that we have in our network. We would like to congratulate the following Lifespan advisers on both their success last night, but also for being recognised as finalists. We are really proud of our Lifespan adviser community, and of Prashant, Sheshan, Kris, and Daniel for achieving this well-deserved recognition!

Congratulations to Kris Meuwissen, Wealtheon, being awarded Client Servicing Individual of the Year. You can catch Kris chatting with Michael Gershkov about ‘Building a thriving advice practice of the future‘ in a recent Lifespan Live podcast (Season 2, Episode 2). 

What an amazing result! 

Congratulations to all of the finalists and winners at the awards last night. It was an exciting opportunity to be able to attend the ceremony in person and connect and celebrate with everyone on the night. You can find details of all the winners and finalists here.

Client focus yields financial practice growth

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Recently I had the great pleasure of catching up with James McFall, Lifespan licensee, Managing Director of Yield Financial, and recent inductee to the FS Power 50, top Australian influential Financial Advisers 2021. We enjoyed a lively discussion on why a focus on your clients is central to building a successful advice practice.

James believes listening to what your clients want and providing personalised solutions are the most important aspects of being a good financial adviser. And creating a team culture that’s 100% founded on creating fantastic client experiences is the most important aspect of running a successful advice practice. As he puts it, “Our first team value is clients come first. And we’re always talking about client experience. Basically, everything, always, is centered around that.”

Having always known he wanted to run his own business, with early dreams of a landscaping business, James’s career has seen him grow from mowing neighbours’ lawns, to helping clients achieve their own real estate and financial dreams. “Ultimately, what drew me to financial planning was that I get a lot of satisfaction out of helping people”. In whatever he has undertaken, from trading into focusing on property and then into, more broadly, the retirement space, his focus has always been firmly on understanding his clients’ needs and delivering an outstanding client experience.

Before you can understand what your clients need, you need to first understand who your clients are. I was interested to discover how James had gone about defining who his target market is, and what made him focus on the retirement sector once he moved away from the property business.

“We looked at our clients. Progressively, as the years have gone on, we’ve looked at where we are attracting our most interest, who the clients are that we enjoy working with the most, and also from a point of view of where it’s most economic. And where the greatest need is. That process has been a pretty big evolution, but now we’re really clear on who our target market is. And the closer we’ve become to defining it, the more rapid our traction has become. So we basically target, or can help best, local professionals over 40, to help them retire securely.”

It can sometimes be challenging getting advisers to understand that by defining your target market you are giving yourself more opportunity, not less. When advisers first start out many aren’t prepared to go out and say this is my target market, this is who I want to work with exclusively. However, as James has found, at the end of the day, if you do define your target market, the benefits that you get from it over time add up exponentially. The more focused you are on your target clients and your message, the better you can assist them. You understand them more intimately, and because of this you can deliver more value to them, and ultimately you are more valuable to them.

“I think the reality is that we’ve got a level of scale now that allows us to still be that broad. Because it’s still quite broad. I think that if I was starting again, I’d be a lot more specific and maybe broaden from there. For example, I don’t know of a financial planning firm that’s focused on helping marketing professionals. Wouldn’t that just talk directly to you?” If you’re the only person doing it, there are plenty of potential clients that would value what you offer.

It is one thing identifying who your target market is, but what did James believe was the key to managing his business growth, without compromising the client experience?

“I think that strong processes and team training and alignment is what is essential to making the client experience repeatable. So to support that and to help ensure that client experience, we’ve process mapped every step of our advice process in our database AI. So that means that, interchangeably, the different people in the team that are responsible for that step, can’t miss it. We have developed email templates for each step of the advice process. We’ve also written a financial processing eBook, that’s an introduction to what to expect pre-first meeting. We’ve also created a fee matrix that personalizes our quoting, so that means that whoever is providing a quote for our client, it’s going to be priced the same. And then we’ve got a strong financial plan template and the technology that underpins it. So that is what makes it repeatable”.

James has also found the integration of technology invaluable. Everything from Xero for business to LastPass for passwords. Even before COVID, Yield were using Cloud computing, which made switching to working from home so much easier. “We’ve also found Revex amazing and we’re getting more and more value out of that”. All these technological solutions help to manage business growth more efficiently and effectively, without compromising the client experience.

“Over time there have been so many things that we have learned from, but one of the best things that you can do is to implement position descriptions”. In order to succeed in growing your team and your business by delivering exceptional client experiences, this becomes increasingly important. “If people aren’t really clear on what you are asking them to do, then you’re not really setting them up for success. I think scaling a team is the hardest thing and in order to do that successfully, you have to invest the time to get the process right.”

“I’ve been in the business for more than 15 years now. And in that time, we’ve built a good strong loyal client base. We have a Net Promoter Score (NPS) feedback system which we regularly ask for, and our current NPS is 71, and we use that feedback as part of our incentive scheme”. This all helps to ensure the focus of the team is always on delivering a great client experience, gathering feedback, and making incremental improvements. Focus on great client outcomes is delivering great results, not only for Yield’s clients but for James and his team.

James summed it up by saying “I’m proud of the life that I’m making for myself and my family, the team culture we’re creating and the business that we’re building.”

Lifespan Financial Planning is proud to support James and his team as their licensee. To find out more about how you can join our award-winning team, please call us on (02) 9252 2000.

Key considerations when choosing your new licensee. It’s not all about the money.

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The changing licensee landscape presents a range of options from self-licensing, boutique, mid and large-tier options, all with their pros and cons. For many, this decision is one that they want to stand the test of time. It is not a disruption that you want to linger in your business.

Often the decision to change licensee has been heavily deliberated over a long time. Sometimes decisions need to be made in an instant, following licensee upheaval, or personal disruption. However, for most, these decisions hang heavily in a practice for some time, causing continued uncertainty and distraction.

Whatever option you choose, there is a misconception that the main deciding factor for choosing a licensee is always price. Advice practice principals know better than anyone, that value should always come before price. Sometimes choosing the cheapest option can be a false economy. You will often lose in other areas such as lost productivity, as you lack the support you need to thrive. But exactly how best to assess that value as it relates to you and your business, can prove challenging.

Rather than licensee fees being the primary deciding factor in choosing a licensee, often increased fees at your current licensee, can create the impetus to start evaluating your options. Skyrocketing operational costs can be the driver for many to make the change.  That was the case for Kellie Tesolin, practice principal at RetireStrong, based in Brisbane, Qld. Kellie joined the Lifespan Financial Planning community back in July 2021.

“The licensee that I was previously with significantly increased their fees. They had frozen their fees for three years, …, but then the new fee structures came out and they were nearly three times the price. For a single operator, single adviser practice you had to look at other options because it wasn’t viable to continue…” (under their new fee structure). 

However, despite high fees being the driver in Kellie deciding to look for a new licensee, it wasn’t the primary factor in deciding which licensee was the best fit for her practice.

Kellie had in-depth conversations with a range of people, including other advisers and contacts that she had within several financial planning practices. 

“I talked to other advisers. My previous boss actually moved to Lifespan about 18 months previously. I asked him and I asked other people who’d moved to other licensees and heard how their experience had gone. I’d also spoken to the paraplanner I used to work with, which was important because I’m a small business. I do a lot of the admin work myself. So, I wanted to hear what they thought of licensee support and the feedback I received about Lifespan was all positive.”

The value of being a part of a tight-knit community should also never be underestimated. After all, most small business operators want to be a part of something bigger. A place to connect and share ideas and insights with like-minded advisers. For Kellie, this was a critical consideration in her decision-making.

“Lifespan is approachable and very supportive and helpful. That’s what I was looking for. I wanted a culture that is friendly, and the opportunity to do things face-to-face. Where I came from, there weren’t any face-to-face conferences or Professional Development Days. When I saw Lifespan was doing a face-to-face conference this year and they’ve been doing PD days, face-to-face I thought that was really good for the culture, and being able to network with other advisers would be great.”

It is important not to underestimate the value of a responsive and empathetic practice development manager through this process. To make a well-considered decision, you need to have all of the information at hand and feel well supported to make the transition. If someone is not providing you with what you need through the research process, it is a fair indication that the support on offer might not be what you are looking for. This is something that was at the heart of Kellie’s decision to choose Lifespan. Discussing the support she had received from her local QLD Practice Development Manager, Kevin Mayne, Kellie emphasised “Kevin made it so easy for me, and was a big factor in choosing Lifespan.”

If you would like to find out more about our tight-knit advice community, or simply have a confidential discussion about whether Lifespan might be the right fit for your business, please get in touch with our National Practice Development Managers.

You can also listen to this interview as a podcast here.

Kevin Mayne

ifa Show Podcast – Incoming regulations to cause ‘explosion’ in advice industry

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ifa show podcast

In this episode of The ifa Show podcast, 2021 ifa Excellence Awards finalist and CEO of Lifespan Financial Planning, Eugene Ardino, joins host Neil Griffiths to discuss his third year in a row as finalist, Dealer Group of the Year.

Importantly Eugene discusses some of the issues industry is facing and how we are working together to address these issues, including an overcompliance in the advice industry, just days out from more regulation coming in relation to breach reporting, hawking and information sharing, which he said will cause an “explosion” in the sector.

“I think four of the upcoming regulatory changes directly impact financial advisers, which is something that I don’t know that we’ve seen too many times in the past,” he said.

“Plus, there’s been other new legislations or drastic changes to legislations that have happened this year. So, this is all flying through into the back-office cost of advisers, which then gets passed onto consumers.”

“I really enjoyed being a guest on the ifa Show Podcast. We chatted about all things awards, adviser mental health, overregulation, and even…Finfluencers!”

You can listen to the podcast here.

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