Over the past 10 years, the advice industry has undergone a revolution. It has professionalised, changing its mindset from selling financial products to holistic financial planning. Nevertheless, the administration burden still constrains growth for many adviser businesses, preventing them from taking advantage of growing demand for advice services. According to a new survey from Quilter Financial Planning, half of advisers have ambitions to grow their business and client base over the coming year. But over fifty percent of respondents cite administrative tasks being their greatest daily pain-point, with regulation and compliance being their greatest concerns. The question is - how can advisers manage this effectively, allowing them to service more customers and improve client outcomes?
Demand for financial advice is booming. In a study of more than 4,200 certified Financial Planners around the world, the Financial Planning Standards Board found four-fifths expected demand for financial planning to increase as baby boomers retire and transfer wealth to younger generations. There are clients aplenty for those advice businesses that can structure themselves to take advantage.
Perhaps the least surprising finding of the recent Quilter Financial Planning survey was that adviser businesses could grow faster if they could reduce their admin. It showed that administrative delays can threaten client relationships and inhibit business growth. The number one business concern of advisers is staying on top of compliance and governance requirements. This concern trumps all others - and is in fact regarded as more important than managing client expectations. For 51% of advisers, the largest chunk of their time is spent on administration. Managing this and making more time to serve customers is the key to growth.
Advisers accept that much of the guidance emerging from the regulator is necessary. However, it is worth looking at how that guidance is interpreted and enforced by compliance departments and outsourced compliance companies. As one adviser commented, "We have a regulator that's principles-based, which should be great. But by the time it hits a compliance department or a compliance company, it stops being principles-based and it starts becoming rules-based, which is the complete opposite of how it started."
The right compliance partner shouldn't be making your life harder. They are there to make your business run as efficiently as possible while remaining compliant, not to cover their backs. They should be able to explain clearly why they have interpreted the rules as they have. If they can't, you may be with the wrong team.
Hollie Swift, Chief Risk Officer at Quilter Financial Planning commented; ‘I think we can all agree that there is a certain amount of paperwork that comes with doing business. What is important is that this paperwork is clear and simple to follow and shows customers the value of the advice they have received. This is easy to say, but making it as straightforward as possible to produce good quality paperwork is vital to help advisers have the time they need to focus on the advice itself, and needs to be of paramount importance in any partner you select to support you. As noted by one adviser, we are working in a regulatory environment that is becoming ever-more principles-based, and one which is entirely focused on achieving good outcomes for customers. A good compliance partner will take those principles and all the regulatory guidance that is published in support of them, consider how these translate into good end outcomes for customers and how these can then best be documented in a meaningful customer-focused way. That compliance partner will then turn this all into a practical framework for its advisers, that is straightforward, safe and sustainable for you to work within.'
Advisers spend a lot of time on administration duties when it comes to collating information from providers. There is no single magic bullet to resolve this, but it can be made much better. Consolidating providers to achieve economies of scale and focusing on the most efficient is a good starting point. Reducing the time spent dealing with different platforms, each with different requirements and capabilities, each of which needs to be selected and reviewed, is potentially time gained to spend on the more beneficial work with clients and business growth.
Using tech automation can also diminish the administration burden. It might take time to implement - but that time is an investment which is returned in increased productivity down the line. As one adviser said to us: "[Operating digitally] allows us to offer more frequent advice to clients and more intensive advice, so much so that the number of clients we can actually advise has increased considerably."
This post was funded by Quilter Financial Planning