GUEST COLUMNIST – KATRINA SHANKS
Katrina Shanks says the two-year journey to the dawn of March 15 has encouraged all advisers to put their processes and systems under the microscope while exploring new ways of working more efficiently with their clients…
When we started gearing up for the new financial advice regime, March 2023 seemed like a distant future. But we also knew that the end of the two-year transition period would come around quickly.
There was quite a bit of work to do to get there, from thinking about the business structure through to reviewing and implementing robust processes. So, I’d like to acknowledge the great job that all financial advisers have put in to get their businesses up to speed, while also helping clients during one of the most uncertain times in recent history.
Even though March 15 feels like the end point of a long, winding road, I believe it should be celebrated as a strong beginning. It’s a testament to the resilience of the financial advice industry: up to the challenge and willing to adapt, if adapting means doing what’s best for clients.
So, what does advice after licensing look like? I pondered this question over the past few weeks, and here are some thoughts.
Advice can’t happen in a vacuum
This period of heightened change for our industry coincided with one of the most uncertain economic environments we’ve had in years.
Triggered by the pandemic, we’ve seen the inescapable return of high inflation, and with it, rising interest rates. Kiwis’ financial resilience has been put to the test, and somewhat surprisingly, consumer confidence and spending remained high for longer than expected.
But it looks like 2023 will be ‘the year of aftershocks’, as The Economist(1) described it in their latest annual special “The World Ahead 2023”.
In a world faced with interlocking challenges, making predictions is a shot in the dark at best. Uncertainty is the only certainty there is. That’s why people don’t need crystal balls (they wouldn’t work anyway).
What they need is good strategies and information from a range of trusted sources; people who can help them connect the dots and understand the impact of seemingly distant events on their own financial life.
While not all advisers are qualified to provide advice across all areas, their advice always stems from big-picture thinking. As it takes into account clients’ circumstances as well as the market and the economic environment at large, advisers’ skillset will be extremely valuable for Kiwis in the foreseeable future.
Technology as a time-saver
The new regime has given all financial advice businesses a great opportunity to put their processes under the microscope and identify inefficiency. There’s no denying that financial advisers wear multiple hats, and unfortunately, when all their responsibilities are combined, there’s not much time left for client-facing activities.
According to AIA’s research into the mental health of the New Zealand adviser community, advisers spend only 11% of their time giving advice and 40% on admin tasks.
So, reducing the time spent on admin is not just a matter of business efficiency, it’s about putting clients first, in line with the new regime. And that’s where technology can be of huge help.
Over the past few years, new technologies and digitisation have expanded and accelerated, enabling advisers to improve communication, gain deeper insight into their clients’ needs, and streamline processes.
While March 2023 is not the end point, we are on the right track…
I believe we will be seeing more uptake of technology in the years to come, with client data providing valuable insights and opportunities for more personalised advice. But that doesn’t mean technology and automation will replace human connections. In fact, the goal here is to create the conditions for more of those all-important client-facing tasks.
Trust-building is an ongoing effort
Even before the new regime took effect, trust has always been essential in the adviser-client relationship. But with more clearly defined standards and duties, the legislative changes are helping to strengthen the consumer confidence in the industry, by simplifying access to quality advice.
While March 2023 is not the end point, we are on the right track. Both our ‘Trust in Advice’ report and research from the FMA found that financial advisers are highly trusted. And we know that trust multiplies – when people trust you, they’re likely to be loyal to your business and share your services and abilities with friends and family.
To achieve this, of course, regular communication – with a constant exchange of resources and feedback – is the key. It’s about inviting clients to feel part of a conversation that enriches and enhances their lives.
And importantly, the new regime leaves advisers with ample room to choose how to implement good communication practices in their business.
So, here’s the bottom line. Now that things are finally settling down, advisers have the opportunity to build upon the principles that the new regime has introduced, with both their needs and their clients’ need top of mind. The season of fine tuning and refining is about to begin.
Sources:
• The Economist, The World Ahead 2023
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