The public, not FOFA, will shape financial planning in 2013

Blogger: Colin Williams, director, Humble Financial Services

Do you start the New Year with that ‘here we go again’ feeling? You know it’s time to start analyzing the best opportunities for your strategic plan - but no matter how many years you’ve been in this business, it’s always hard to get across all that new information and make your first move.

Most people I speak to in financial services only have one word (or acronym, rather) on their mind: FoFA. But I don’t see FoFA as a significant factor in 2013. There’s a simple reason for that: 99.99% of the public have not heard of FoFA, and would not care if they had.

The public will decide the future of financial planning in Australia, not Government legislation.

How will the public shape the future financial planning? They will do it through their newfound knowledge. This is a threat to the Financial Planning industry, but also an opportunity.

The web and social media are arming the public with more knowledge than ever before - ‘Just Google it’ is now a part of everyday language. And what do people find when they ‘Google’ financial planning or engage with others through social media? They find that every institution is in a race to bring out another ‘low cost product’, cheaper than their rivals. They will even find a major online business ‘giving away’ superannuation products.

As they search they also discover other news. Much of it is about how financial planners are being blamed for letting their clients down. You know the headlines and stories just as well as I do.

The public is also discovering directly from financial planners that they (the planners) have difficulty adding value. Recently, I read an FSG on a planner’s website belonging to a major dealer group. His annual fees for a $100,000 investment are greater than $4000. For that fee you get the privilege of a few reviews but if then you need or want a ‘strategy’ you have to pay for that and it could be anything from $770 to $8,800.

If this planner sells a lot of product, he also gets some bonuses and a chance of a nice trip. I’m quite sure the planner will comply with FoFA but seriously, how can anyone read his fees and believe that he can add value?

These are just some of the threats of the public’s new-found knowledge. But as anyone who has completed a SWOT (Strengths, Weaknesses, Threats and Opportunities) analysis within their strategic plan will know that threats can also be opportunities.

So where are the opportunities? Knowledge through the web and social media is a two way street. Just as potential clients can find out more about you and the industry, you too can find out more about potential clients. All you have to do is tune in and be a part of the conversation that’s already happening on social networks like Twitter, LinkedIn and Facebook,

People no longer trust media releases and old hat ‘brochure style web content’. They do however trust what other people say, especially their friends. People also want to know more about you and your clients. They need to be able to understand what Financial Planners do, why they do it and how it will benefit them as clients.

The big winners for 2013 will be the small advisory businesses that make an effort to connect and engage with the public over these questions. It is very difficult to have a conversation on the Internet with a giant institution, but very easy to talk with a local ‘expert’.

The small advisory business has never before had such a low cost opportunity to tap into a big audience. But before you jump on the bandwagon, there is one major test that you must pass - The test of authenticity.

You can’t be one person on the Internet and someone else face-to-face. You can’t say ‘We are all about the client’ but slug them for a 4% annual fee and send them a postcard from your free trip (that they paid for). Be wary of making mistakes like this.

On social media, practically everything your company says and does is recorded, as well as things people say about you. It’s word of mouth on steroids. There’s nowhere to hide.

So in 2013 don’t just sit there thinking about FoFA. Instead, get out onto the net and let the people know that you are listening. Let them know that you really do care and you can add value in many ways. Once they know and like you, trust will follow. They will tell the world about your company and you’ll come out of 2013 stronger than ever.

About Colin Williams
Colin Williams is director of The Humble Investor, consulting to financial advisers on social media, marketing and business development. Colin has over 25 years experience in the advice business, starting as an adviser through to holding general manager roles with ANZ, ipac, Raboabank and Hillross.