Speaking with ifa, Matt Hale, managing director at Rising Tide Financial Services, said the high cost of providing advice can be a heavy burden but advisers should refine their client base to help reduce costs.
While there has been a slight shift within the advice profession towards specialisation, Hale believes that advisers need not specialise so much as refine their client base and “not be all things to all people”.
“People are complex. At the end of the day, we’re dealing with people with different psychographic needs and wants and they come from different backgrounds, experiences and values with money,” he said.
“I don’t think the general practitioner mindset works when it comes to people and their money.”
Further explaining this, Hale said that advice practices need to focus on their “advice philosophies, their ideal clients, ideal providers”, noting that while much of the regulatory changes are out of advisers’ hands, these are factors “that they consciously have control over”.
Using technology and product providers as an example, Hale said one of the benefits that comes with a more refined client base is that advice firms can also refine the providers they use, which, in turn, will bring down costs, improve efficiency, and remove unnecessary complexities.
If practices were, for example, using 50 different service providers, then that would require “50 lots of training their staff need to do. It’s 50 lots of applications they need to understand, 50 different business development managers they have to communicate with”.
“I just think it’s about finding the right balance. If you understand who your ideal client profiles are, you should then be able to overlay that with philosophies and strategies that suit their needs and goals. And then products that sort of cascade down from there,” Hale said.
Understanding what type of client advisers wish to work with, he added, will inform the capabilities and needs of the clients and dictate the needs of the firm.
“The first part always starts with your ideal clients in my perspective. Your ideal clients aren’t just age or geography, it’s how they think, it’s are they digitally competent or not?” he said.
Hale added: “Think about if you have a restaurant that’s trying to serve cheeseburgers to my four-year-old, and a top of the line steak to a 75-year-old grandpa.
“How can you provide a consistent client service and then also say that you do both of those things with passion and consistency and continuity in a scalable manner?”
One way a lot of advisers have “refined” their offering is by no longer offering insurance advice. Bad regulation has made all professional advice more complex and expensive, but insurance is the area where it has had greatest impact. Withdrawing from professional insurance advice altogether has been the inevitable response.
Insurers, regulators, and “consumer associations” will probably chalk this up as a victory. However in a few years time when direct and union super insurance only replaces a tiny proportion of advised insurance, and thousands of families who experience the death or illness of a primary income earner are financially devastated, there may finally be some acknowledgement of the negative impact of bad regulation.