Why there is no better time to be an adviser

Speaking on the latest episode of the ifa podcast, Marc Hraiki, executive director of adviser sales and services at Lonsec, said that he is “bullish” on both the current state of advice and the future of the profession.

“In general, life is complex. Individuals, Australians, have complex financial needs. In concert with that, we have an ageing population who have complex environments and complex needs to meet,” Mr Hraiki said.

“You couple that with the fact that we’ve got a reducing adviser base or reducing number of advisers and it creates a perfect storm of demand and supply. So, for really strong advice businesses, the opportunity is enormous. I think it’s a great time to be in the space, and for anyone considering the space, a great time to consider it.”

While Mr Hraiki has a positive outlook on the advice landscape, he isn’t pretending there are no challenges for advisers, including the tough market dynamics currently at play.

“Since the onset of COVID, we’ve had three years of volatile markets. We’ve seen interest rates increase, seemingly an endless spike of interest rate increases on a monthly basis, which has led to cost-of-living pressures and so on and so forth,” he explained.

“Through these challenging times, the adviser’s role is really to play a number of different roles, that being of coach, that being of adviser, that being of psychologist. And the challenge for advisers is to ensure that clients are sticking to their financial plans, staying the course.

“I think a lot of times, the real benefit of an adviser is to ensure that clients aren’t doing anything silly through these periods. So certainly, the market dynamics is a challenge at the moment.”

Mr Hraiki also pointed to cost pressures on advisers thanks to a decade of regulatory reform as another factor making life tougher for the profession.

“We’ve had the royal commission and flow on impacts there, FOFA preceding that. That’s led to a focus around compliance and a change in operating rhythms for a lot of financial planning firms and AFSLs,” he said.

“So, those cost pressures have led to an increased cost to serve. It costs more to provide the same level of advice to clients. That’s probably a challenge for a number of advice firms.”

Scale is another area of concern, he said, both in terms of attracting new clients and servicing them once they are brought on.

“Focusing and having the time to attract new clients, the ways in which you attract new clients, the business development activity,” Mr Hraiki said.

“In concert with that would be once I’ve attracted the clients, how am I servicing them? The cost of service increasing, how am I building the scale and efficiency to be able to effectively service my clients?”

To hear more from Mr Hraiki, tune in here.