Annual opt-in transition offers up-sell opportunity

In an upcoming episode of The ifa Show podcast, 9ROK managing director Kim Payne said while the transition could create administrative challenges for advisers, it could also be an opportunity to look at new, more flexible models such as tailoring service levels on an annual basis.

“The way we are as consumers is we’ve got so much choice – we can buy the big Foxtel package that has every program under the sun, or we get the basics where we can record TV shows and maybe access some different things,” Ms Payne said. 

“It’s that way of thinking that advisers are starting to adopt really well – they’re offering different levels where the client can choose the amount of accessibility, and they’re offering that from the beginning or offering it at a certain point in time. 

“For instance the first 12 months, this is what [the service] looks like, and from 12 months onwards you can choose what level of service you want.”

Ms Payne said by adopting a subscription model with different levels of service and personalisation, and the freedom to change service levels every year, advisers could better demonstrate value to clients.

“It means if I’m having a conversation with [the client] every year, I’m looking at what offer I can bring to the table over the next 12 months, knowing that in 12 months’ time we’re going to sit down and look at it again,” she said.

“What advisers are able to say to clients is over the next 12 months these are the options we’ve got – A, B, C – [and] you might be on option B, but then at the end of the 12 months we’ll have a look at it and it might not be what you need. Maybe you’re going to need more depending what’s going on in your life, but maybe you’ll need less.”

While this model could create new challenges for advisers from a revenue forecasting perspective, it could also boost client retention and engagement, Ms Payne said.

“You can’t forecast out what your ongoing revenue is as you could in the past, but if you do this right, each year if the client really understands the value they are going to get from the relationship they have and how you’re going to look after them, they are going to pay the money,” she said.

“That’s a good thing because advisers genuinely are valuable and I think there’s always been a disconnect between how valuable they are and what clients experience in terms of value, so that’s why over the years you’ve had clients not wanting to commit to ongoing service. 

“As long as the adviser steps up to the plate and helps the client understand that value, that’s been a brilliant change that the whole industry move towards annual agreements has really brought to the table.”