Modern Financial Advice: The Six Million Dollar Adviser

April 7, 2017 Modern Financial Advice

In the 1970’s we followed the adventures of Steve Austin the astronaut who after a spaceship crash was given bionic enhancements that made him stronger and faster. Who could forget those awesome special effects (and catchy sound effects)?

In a recent article in IFA Magazine Richard Arnold suggested that “we are headed towards a day where the average client wants to spend not $5,000 per year for financial advice but $500”. He goes on to say that the average adviser will need to service 1,000 clients and that will require a new type of “bionic adviser, a human financial adviser who concentrates on building and maintaining personal relationships and structuring financial plans armed with the bionics of an automated digital assistant”.

So, is this the future for modern financial advice? Well…. yes, but no.

For those financial advisers that provide little more than:

  • Determining a client’s risk profile and then matching this to an investment portfolio and/or,
  • Working out appropriate insurance levels for the client and implementing a suitable policy, and
  • Re-balancing investments and insurance at each review.

Then, yes, these advisers will need to have 1,000 clients as these services will become commoditised and cheap.

Modern financial advice is strategic

However, those advisers that understand that the true value of advice has always been around strategy rather than product, will truly be the “six million dollar advisers” of the future.

The modern adviser does need to have “bionic” systems in place to help clients understand complex strategies and empower them to make informed decisions, however, to demonstrate the real value of advice, these systems will always require a human to help answer questions and provide deeper context and understanding.

Valuable modern financial advice is about understanding the various aspects of financial advice and how they integrate around a client’s unique personal circumstances to produce a valuable and compliant financial plan.

But even more importantly, it’s about monitoring and understanding the impact of: 1) changes in tax and superannuation rules, 2) changes in market conditions and 3) changes in the client’s own circumstances.

The adviser’s role is to interpret all this change and continuously identify opportunities and threats to the client’s financial plan and to make the necessary strategic adjustments in a timely manner. And the modern client that understands this will be happy to pay a larger annual fee.

To be that bionic adviser you will need plenty of help with the right technology around you to bring together your service offering and make it happen.

Hans Egger is Co-founder and managing director of AstuteWheel Client Engager, Financial Planning Software and Estate Planning Software and admin of The Modern Adviser

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