All licensees look essentially the same, and they’re all wrapped up doing things that add little value to the real business of giving advice. GPS Wealth managing director Grahame Evans says when regulatory compliance and advice efficiency is taken care of by the twin black boxes of regtech and fintech, all that remains for licensees to compete on is supporting the human, face-to-face aspect of advice.
Licensees that can’t adapt to support advisers in this new world, backed by deep understanding of client needs and wants, will be wiped out, Evans says.
“I’m not talking about next week, but I’m not talking too far down the track,” Evans says.
“What a lot of licensees do is authorise people; they are effectively subcontractors of the regulator in regard to compliance, and we all struggle with that; and they collect the fees and pay it on. They all look the same.
“If we can solve all those problems through [tech], the licensee is gone. We don’t need it.”
Evans says financial planning technology exists in three strata: regtech, to ensure compliance; fintech, to drive advice and business efficiency; and advicetech, supporting the advisers in their relationships with clients.
Evans says that in a “good” industry there should be no competitive advantage in helping advisers simply not break the law, even though that’s exactly what many licensees spend an inordinate amount of time and effort doing. That’s the first aspect of the licensee offer that can be done by technology.
“Regtech [solutions] are what I call the ‘checkers’, and there’s lots of opportunity for the industry to collaborate,” Evans says. “It’s not a competitive advantage to the users.
“Then we’ve got fintech, where we’re talking about platforms…and all sorts of different technologies, which I call ‘enablers’. They enable efficiencies, they enable strong communication, they enable speed of action and they also enable efficiencies for practices as well as efficiencies for clients.
“Advicetech, the way you deliver your advice, the way you interact with people, there’s a whole lot of things that you can do. That’s probably the only place, until we are all replaced by machines, where we’re going to have competitive advantage.”
Evans says there are “moments of truth” in a relationship between an adviser and a client, and it’s these critical touch points licensees should focus on to support advisers. But many licensees – and advisers themselves – simply do not know enough about their clients to do so effectively.
Five moments of truth
Where licensees should focus support for advisers
• Discovery– how a client finds and then chooses an adviser
• Introduction– when the client and the adviser first meet
• Engagement– when the adviser presents advice to the client, and moves to implementation
• Renewal– when the adviser and client meet for a review of the client’s goals and progress
• Resolution– how the adviser receives and handles a problem or a complaint, as or when it arises
“To know what’s important to clients in each of those areas, you need research,” Evans says.
“It’s a big issue. People say, ‘I know my clients’. Well, with all due respect, you don’t know your clients. You do not know them as well as you think you know them. Over my many years, I can show you research after research after research, where advisers have gone, ‘Well, I didn’t know that’.
“This is an issue I’ve had for a while. We do not know enough about our clients. We don’t know enough about our client experience, and therefore we don’t know how to improve that client experience.”
Ultimately, Evans says, as professional standards legislation pushes more accountability onto individual advisers, and as technology takes over many of the traditional licensee functions, licensees will no longer authorise individual advisers.
How the licensing or accreditation structure looks in future remains debatable, but it will change the way licensees view their relationship with advisers.
“If you said to the guys and gals who give advice today what do they like doing most, I think to a person they would say talking to clients,” he says. “If we can make sure they’re looked after on [regtech and fintech], then we work with them on enhancing that.
“We need to look like somebody who is actually going to help them with how they engage with clients.”
Evans says the licensee becomes a service provider to advisers, who pay a fee in return for the services they provide and can pick and choose among licensees according to the value their perceive in the licensee offer.
“We’re in this environment of trying to rethink where value is created, and then redesign what we actually do.
“If you extract the adviser from the licensee, it gives them the best possible opportunity to make the best possible decisions on behalf their client, without any external influence whatsoever.”