Six strategies to invigorate your advice business

By Peter Truong, Regional Manager at Centrepoint Alliance

Increasing compliance and licensing costs, new education requirements and regulatory standards are impacting client service delivery. But there are opportunities for financial planners to invigorate their business!

In a constantly evolving advice landscape, there are several strategies that can be followed to extract quality insights into your business and lower your operating costs.

These strategies are based on having an up-to-date client database, which is as important as any infrastructure in your business. Data about your clients and your business are two of the most critical sources of information that will drive your strategy. While the process of cleaning up your database may be time-consuming, the benefits will be substantial.

An up-to-date database could result in a potential increase in valuation on your business, meeting compliance requirements and higher customer satisfaction. Since the Royal Commission’s findings fee-for-no-service findings is top of mind, having a clean and up-to-date database will help you manage these requirements. Any failure to deliver committed services may result in a full refund. Having an up-to-date database will also allow you to fulfil these requirements easily and drive greater efficiency.

Here are six strategies based on an up-to-date database:

1. Identify and understand your target market.
To survive and thrive in the new world of advice, business models need to change. You need to understand the target market you are servicing, including their needs, what is important to them and, most importantly, how your services and pricing match the demographics. Don’t try to service every segment - you will strain your resources, and the service offering may not be as effective.

2. Know your cost to serve
Do you know how much it costs to provide advice to your clients? You must understand your cost to serve. Don’t assume what it should cost or what the industry averages are. Having a clear understanding of your costs will help you remain profitable and sustainable to provide quality advice to your clients.

Here are just some techniques to work out your cost to serve:

• Full analysis. Work out how much time is spent on an average file for simple, moderate and complex advice. This includes anyone in the office performing a task on that file. Work out the cost of each employee who performed those tasks, then add your infrastructure costs for each client. Many practices do not know their entire infrastructure cost, so it could take some time to work out. However, once you’ve factored in all costs, you will have a robust view of your true cost to service.
• Estimation. This is where you can use an approximation of the time spent on each file. This is a quicker but less accurate method, but it provides insight into your cost to service each client. Map out your processes and allocate the amount of time spent compiling the advice, annual review and/or more frequent meetings.3. 

• Use technology more effectively by automating your processes.
• Educate clients to be more involved and to supply you with information before your meetings.
• Give your support staff administrative work instead of yourself or outsource where appropriate.

4. Price match to your targets
Once you have identified how much you want to charge to be sustainable, you need to understand whether your pricing matches your target clients. If there is a mismatch, you will need to evaluate and reassess your strategy. Remember, understand your target market, provide services that clients need and charge accordingly. Not every client needs to be an ongoing client.

5. Articulate your value proposition
Once you have understood your target market, costs and ensured that the pricing of your services is consistent with the needs of your target client base, the next question is how to articulate your value proposition. A clear value proposition demonstrates to the client how you can add value or peace of mind to their life. More importantly, it is how you can help them to achieve their goals and objectives. It is important to spend appropriate time explaining and educating the client on the work you and your team perform to manage and monitor their investments. Advisers should not just focus on the financial side alone and consider the client’s mental wellbeing and happiness. A client is unlikely to focus on the cost of the service if they can see the value you add to their life.

6. Implement your new service offering
Once you have finalised your new service package, it is important to understand how this will impact the clients you want to service. Now is the time to segment your clients based on their needs and your service offering. Be mindful that any substantial increases may impact the client and consider implementing price increases over a staggered period. Alternatively, you need to ask yourself whether the client needs the ongoing service. Set a clear timeline and constantly review client feedback about your new offering. This will provide you with insight into whether the strategy and pricing are correct.

Powering your business with data-driven insights
Your licensee is critical to your business success, as they can provide you with data analytics and tools to help you understand how your business can manage risk, grow sustainably and, more importantly, deliver quality advice to your clients.

At Centrepoint Alliance we help firms to gain greater insights into their clients and business drivers through Practice Dashboard.

The information stored in clients’ databases can be linked to our Practice Dashboard to provide even greater insights.

The Practice Dashboard uses the power of an integrated data collection system, which collates data from multiple sources to provide insights into ways our members can improve efficiency and achieve growth. It reveals sources of revenue, monthly cashflow, client base summaries, and product providers in an easy to understand visual format.

Using forecasting models, advisers can test possible impacts to revenue and costs, based on a number of variables and scenarios, helping them to make more informed decisions.

These insights help advice firms reset their strategy, create effective services with sustainable pricing and, more importantly, model the impact on their business and clients.