Changing course amid the ‘perfect storm’
The conditions circling financial advice over the past decade have no doubt been challenging to navigate.
Following years of regulatory uncertainty, the industry found itself staring headlong into the COVID-19 pandemic and its associated market volatility, just as it began to grapple with the dual challenges of rising demand and the mass exodus of qualified planners.
With markets oscillating wildly as COVID-19 struck the financial system, businesses across the nation were forced into making agonisingly difficult decisions about how to prioritise the portfolio rebalances required across their client book.The perfect storm
Staring into the eye of the sector’s latest storm, savvy practice leads saw the pandemic as an opportunity to reset their compass, setting into motion a raft of changes designed to position their business to benefit from Australia’s increasing demand for financial advice.
The challenge was to find a way to increase efficiencies across the business , while maintaining the high-level of investment management expertise that clients had become accustomed to.
For some businesses, the solution was to switch to Managed Accounts.
By implementing Managed Accounts, these businesses were able to provide their advisers with the capability to make sweeping changes across the client book when volatility struck, without leaving some clients out in the cold.
In addition, by eliminating the burden of non-revenue-generating work such as the production and distribution of costly Statements of Advice, businesses that have switched to Managed Accounts have a freer hand to onboard clients with, broadening their earning capacity. As a result, these firms are now well placed to seize the opportunity presented by the thousands of new clients needing financial advice.
After implementing Managed Accounts, advisers – experts in curating personal connections – are able to invest in the one-on-one consultations which many clients perceive as the most valuable part of the advice process. This facetime allows advisers to guide clients through difficult market periods, coaching them into making considered investing decisions.
In our 2021 Value of an Adviser report , this aspect of advice is worth 2% p.a. to a clients’ portfolio.
Comfortable in the knowledge that their portfolio is being managed by a panel of investment professionals well versed in handling rough conditions, clients enjoy the increased opportunity to ask questions of their adviser and seek counsel.
For advisers armed with advanced investment platforms, Managed Accounts providers give them the ability to increase the transparency of each clients’ investments. For clients, real-time visibility of their portfolio strengthens their trust in the advice process and lifts their perception of the value of advice, particularly as their portfolio is rebalanced or new ideas are executed.
The winds of change
As 2022 offers an opportunity to review business priorities, more businesses will make similar changes to their business to prepare it for the journey ahead. With this in mind, practice leaders should consider how Managed Accounts providers can best service the specific needs of their clients and business.
Not all Managed Accounts solutions are made equal, and cheap passive options are beginning to flood the market. As with all investment options, the usual caveats of selecting the most appropriate solutions for the business’ clients apply.
For practice leaders, it is crucial to select a provider which caters for the market’s increasing complexity by managing the downside while still exposing clients to the best ideas and positive market movements.
Effective financial advice has helped weather the pandemic-generated storm. Those who have not yet changed direction should reflect on their recent experiences and consider how they can future proof their business with Managed Accounts, ensuring smooth sailing for both the adviser and their clients.