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Forward Thinking Magazine : April 2011
10 Piece by piece or holistic advice? “This is a dynamic advisers cannot afford to ignore,” says Tony Graham, Head of Macquarie Adviser Services. “The evidence suggests consumers are approaching advisers about individual issues such as rolling over their super into a different fund, or they might only be looking to purchase income protection insurance, rather than talking to an adviser about their long-term financial goals and wealth management strategies. Although no one can be 100 per cent certain what the future will hold, our belief is that businesses which can adapt to different advice models are best placed for success in the future. “But while consumers might indicate they just want advice around particular aspects of their long-term wealth planning, is piece-by-piece advice really the best answer to ensure clients’ financial needs are met in retirement?” Graham questions. “ASIC’s report identified that Australia’s insufficient level of financial literacy limits consumers’ engagement with their own finances. If this is the case – and I agree that it is – are consumers able to correctly determine the specific areas in which they require advice?” Certainly, the issue of increasing demand for piece- by-piece financial advice is made more complex by the potential requirement for consumers to opt-in to financial advice on a periodic basis from 2012. “Although there is consumer demand for piece-by- piece financial advice, the regulatory regime appears to be moving in a different direction. The basis of the potential opt-in requirement supports the holistic advice model. In addition, we are curious as to whether many advisers would be prepared to offer piece-by- piece financial advice without having conducted a full assessment of the client’s long-term financial goals, risk appetite and individual situation,” he says. Moving forward with technology One thing we know for certain is that the already rapid technology changes in the industry will accelerate over the next decade and will play a big part in shaping our future. “Technology is already offering you new mediums for communicating and information sharing with your clients and your peers, and in most cases is also offering increased scalability while allowing you to maintain and improve client service standards,” Graham says. “These developments will have a huge impact on the industry as we know it, particularly as Gen X and Gen Y replace baby boomers and pre-retirees to become your significant client base. These dynamics provide a once-in-a-lifetime oppor tunity for planners to develop a clear vision around how to mould and shape their practices to best respond to new market conditions. In this ar ticle, we look at the key future themes and forces affecting advisers, as well as how some practices are preparing for changing industry dynamics. As the Australian Securities and Investments Commission’s recent repor t, Access to financial advice in Australia showed, Australians, par ticularly those who have never accessed financial advice, are increasingly inquiring about piece-by-piece as opposed to holistic financial advice.