Is the advice industry suffering from “change fatigue”?

This article has been taken from the NMP education library which has now moved to Advisely

When Financial Advice Matters Group (FAMG) launched a separate business focused on corporate wellness education seven years ago, managing director Darren Smith became acutely aware of how much was missing from the general public’s understanding of financial advice. 

“One of our clients is a psychologist,” Smith recalls, “and they introduced us to a mental health group, which is how it started. In some ways the education business has become the innovation arm for our advice business; we go into workplaces and deal with different levels of financial literacy, and it teaches us new tools and ways of communicating.”

For Smith, doing this kind of work reinforced the critical role “life coaching” plays in the overall advice proposition. “Sure,” he says, “we help them with their super, but there’s so much more to it – it’s connected to their lifestyle and what’s important to them.”

The education business, which has resulted in referrals to the advice arm but has to “stand on its own two feet” regardless, helped Smith realise just how important communication is in financial advice. FAMG services over 1,200 clients in seven locations across Queensland – Smith says clients range from “Mum and Dad with a bit to Mum and Dad with a lot” – which means communication has to be consistent and aligned with what he’s previously described as the “single source of truth” for every adviser in the business. 

That communication extends to existing clients’ family members, some of whom go on to become FAMG clients in their own right. Smith explains: “We’ll go up, down and across the family tree in some cases. We’ll do what’s right for that client to start with, then we’ll help with the family’s broader needs – and that may later involve us assisting both the parents and children with generational wealth transfers.” 

While clients’ concerns can range from retirement planning to wealth transfers and moving into aged care, one issue that seldom comes up is price. “We seldom get questions from the client about our fees,” he says. “As long as we focus on how the advice is benefiting them and the client knows they’re in a better position, the fee becomes a little bit irrelevant.”

Of course, the same can’t be said for some prospective clients or consumers in general. Whether it’s because the average advice fee is simply too high for a good chunk of Australians or due to a general lack of understanding regarding the value of advice (or a combination of both), affordability is a key concern in the ongoing Quality of Advice review.

As we’ve previously discussed, the current proposed solution would effectively open the doors to institutions offering advice services at a lower cost – without being subject to the same obligations and professional standards as full-service professional advisers. While Smith shares the goal of increasing accessibility and affordability, he’s concerned about the idea of allowing certain parties to be exempt from the same rules he and his colleagues have to follow. 

“I think it’s good to take a fresh look at the current system,” Smith says, “but there should be one rule for everyone. If super funds can help more people, that’s a good thing, but don’t penalise other business models.”

He continues: “We want people to ask questions and go to different places for information, but it’s important that they can differentiate between the different sources of information. And understand what they’re paying for – or not paying for.”  

Even if the outcomes of the review end up being broadly positive for the advice industry, though, Smith wonders what they’ll entail from an implementation perspective. “The intent behind the proposed reforms is good,” he says, “but the industry is also suffering from fatigue. Everyone’s still implementing changes that were decided on two or three years ago. 

“Even if the changes are positive, unless it’s just a matter of ‘stop doing this,’ it’s more work to implement them. Advisers really need a break from all the big changes that have happened over the past few years.”