The changing financial advice landscape
In 2020, COVID-19 reshaped everything for financial advisers; from the way you do business to the financial landscape. The crisis highlighted the value you can add in helping clients to navigate turbulent markets, providing reassurance, compassion and understanding.
One of Investopedia’s Top 100 Advisers, Brittney Castro, CEO and Founder of Financially Wise shared her predictions for 2021. “With more and more people left with so much uncertainty with the markets, I think more people will devote time and energy toward their finances by taking personal finance courses, reading books, or hiring a financial planner to help them make smart money decisions in this new world that is emerging.”
In Australia, demand for financial advice has doubled in the last five years
According to Investment Trends 2020 Financial Advice Report, an in-depth survey of the appetite and use of financial advice among Australians, 2.6 million non-advised Australians intend to seek help from a financial planner in the next two years. This figure is double the demand from 2015 (1.3 million), and significantly higher than the 2.1 million in 2019. King Loong Choi, Senior Analyst at Investment Trends commented, “A record number of non-advised Australians realise they need professional financial advice. The pandemic has been a major catalyst, with 44% saying the COVID-19 situation had increased their likelihood of seeking advice.”
Currently, around 20 per cent of Australians are advised in some fashion. By tapping into the 40 per cent of the population who plan to seek advice, the opportunity to service clients increases significantly.
The number of advisers is shrinking
The opportunities are highlighted even more in light of the current reduction in the number and size of institutional players and the number of experienced advisers exiting the market. As educational pre-requisites are ramped up, adviser numbers are declining. According to Rainmaker Information’s Financial Adviser Report, adviser numbers shrunk 16% in the 12 months to June 2020, on top of a 14% drop in the 12 months to June 2019.
Optimise your business model in 2021
With the market for advice shifting, 2021 is the perfect opportunity for you to take some time to reshape your business model, examining your cost and time spent per client. Many haven’t spent time analysing costs, due in part to the mixed income stream model many have grown accustomed to.
Changes brought about by COVID have helped advisers take advantage of technologies such as video conferencing, digital documents and e-signatures to streamline their practices, and gain back valuable time. In a user pays, fee-for-service world, it is crucial for you to understand how you can maximise the efficiency of your practice, including finding the right technological solutions to both suit and highlight the advice you give your clients.
Developing and expanding your practice in 2021
As the experience with COVID has shown, engaging in proactive communications with clients contributes significantly to higher client satisfaction (almost 30% higher, 56% compared to 73% satisfaction). However, during this time many temporarily halted business development activities to focus on existing customers. For those wishing to expand your practice, optimising branding and marketing efforts is an important next step.
While 2021 will bring its own set of challenges, the year ahead is a unique opportunity for you to set yourself up for future success. We’re here to help.
What are you waiting for?