The new way to give advice

To say that there has been some changes from that time is an understatement. When I started, there was no CRM or modelling tools, no fund manager websites and we had rooms full of filing cabinets.

But probably the biggest change I’ve seen (apart from length of SOA) is the advice itself. I feel that there have been three distinct advice phases:

1. Product-Based Advice

When I started in advice, it was very much product-focused.

The marketing was often a PDS. There were nil-entry-fee products — products with a capital guarantee. Awful nil-entry-fee products which didn’t “cost” the client much, but had horrendously high MERs, and advisers who wrote the most product was rewarded with expensive overseas holiday trips.

It was all product, product and product!

2. Goals-Based Advice

Then, we saw the introduction of Financial Services Reform Act (FSLR) where we saw a focus and standardisation of financial product disclosure.

As a result, there was a slow shift to a more goals-based advice and financial or cashflow modelling.

The software choices expanded to accommodate this. We were modelling the next 20 to 30 years of their life.

We were no longer focused on product — that was a byproduct, not the focus of advice.

3. Financial Wellbeing

Personally, I think that we are about to embark on the third evolution, which is financial wellbeing — where advisers will look at how clients can use their money to make them happier, not just wealthier.

This was accelerated by the COVID-19 pandemic as it really made people look inward.

The mass resignation was a sign of this — people leaving behind six-figure salaries.

Soon, the idea of accumulating a big lump sum to retire and to enjoy life will become an outdated notion. People want a life they don’t want to retire from. But happiness will look differently for every client:

• It could be part-time work, travelling around Australia with kids, having a business and enjoying a laptop lifestyle, etc.
• Perhaps having time to take up hobbies and interest outside work and not letting work define you.
• Making health a priority by eating well and exercising frequently.

If we, advisers, are to embrace this next chapter, we need to get good at understanding what makes our clients happy and help them overcome fear and procrastination to act towards this. Coaching and asking great questions will be a critical skill.

I am so excited for the next evolution of advice.

The impact we get to have on clients’ lives is such a privilege to be part of.

With intergenerational wealth transfer now well underway — and with millennials now outnumbering baby boomers — along with new technology and legislation reform, I don’t think there has ever been a better time to be an adviser.

And if you want to understand more about the next evolution of advice, feel free to check out my Facebook group, My Adviser Buddies — we have a whole heap of free training in the guides section.

Adele Martin, founder of My Money Buddy and the Savings Squad podcast