The challenge of managing the inflow of new clients

Since the mass exodus of advisers over recent years due to regulatory changes caused by the 2019 royal commission, some of those who stayed in the industry have been struggling to manage the high number of clients coupled with the low number of advisers to service them.

Chief executive and financial adviser at Financial Edge Group (FEG), Martin McGrath, said there are a number of hurdles making it harder to meet the rising demand for advice.

“I think the struggle to meet the demand is a combination of the imbalance with demand increasing (particular in the retirement space – our speciality) along with the lack of advisers following the exodus in the last few years,” McGrath said.

“Also, the compliance requirements means the time (and costs) to bring in new clients is significant, therefore limiting the number of clients an adviser can look after.”

While recognising the struggles some advice firms are facing, Verse Wealth CEO Corey Wastle said those facing this issue are usually in higher demand due to the provision of quality services.

“It’s a small minority battling to keep up with rising consumer demand, and they’re almost exclusively those with a strong brand and digital presence,” he said.

“For those firms that meet this criteria, it doesn’t happen by accident and it virtually never happens without providing a great client experience over and over again.

“There’s certainly no shortage of consumers trying to find an adviser, but those consumers aren’t spread evenly across advice firms.”

Clients waitlisted

Highlighting the level of demand for advice, McGrath said FEG has a long list of new clients waiting months for their initial meeting.

“In our practice, we want to preserve and respect our relationship with existing clients, so we limit how many new clients we take on,” he said.

“Currently, we have a wait list exceeding three months for new clients meetings. We also limit the number of new client phone call enquiries and that wait list is two–three weeks for a phone call.”

Echoing a similar experience, financial adviser at Lush Wealth Christine Lusher said they have a wait list of customers that have been given a timeframe of when they will “start their financial planning journey” and they have “embraced technology to keep waiting clients in the loop”.

“It’s important to have a plan in place to manage new clients. At Lush Wealth we manage this by limiting the number of new clients we take on each month according to our monthly capacity. In months we have a large quantity of annual reviews, we reduce the new clients we engage,” Lusher added.

“This helps us stay focused on providing quality advice to our existing clients and meeting the demands of new clients.”

Wastle noted the difficulty that a high number of client requests can present to a business.

“At Verse, we’ve seen a rising demand for advice consistently over several years and are fortunate to have hundreds of enquiries each month. Although a great opportunity, managing this volume is a huge challenge. It requires a firm to be well operationalised,” he said.

Growing to meet the demand

To help meet the massive demand, co-founder and financial adviser at Fox & Hare Financial Advice, Glen Hare, said his firm has worked to expand its team of advisers and improve business efficiency by utilising support staff and technology.

“Yes, there is demand, but I think each firm is working out how to deliver on that. We’re growing quite fast in order to try and keep up with that demand,” Hare said.

“The only way that you’ll be able to deliver on that demand is through technology and creating business efficiencies.

“To be able to do that, you’ve still got to have a really efficient support system. And that’s not only technology, but it’s also support staff and processes within the firm.”

On the topic of growth, Wastle said “despite the talk of a rising demand for advice, most advice businesses still have low organic growth rates and most remain reliant on M&A to fuel growth”.