Traditional advice models are based on providing holistic, comprehensive advice to clients – where the adviser controls the advice and in particular, the implementation of that advice. This model only suits those who like to outsource advice to specialists, either because they don’t have the expertise, or they don’t have the time. So, it shouldn’t be a great surprise that only 30% of Australians’ currently receive advice - as only 30% of Australians are outsourcers.
What about the other 70% of Australians? According to Core Data, 50% of Australians are coach seekers, meaning they are looking for someone to coach them along rather than take control of the advice process. The remaining 20% are controllers, who may seek advice, but will ultimately retain control of their advice and investment decisions. Coach seekers and controllers often seek advice one issue at a time. For example, they might want advice on insurance, or to sort out their super – but they don’t necessarily want to undertake a full review of their financial affairs.
The planning industry has been grappling with how to service coach seekers and controllers and in July 2013, legislation was passed allowing advisers to offer scaled advice – or advice on single issues.
Despite this, there are many planners that don’t like scaled advice as it means they are not in control any more. In a perfect world, you would get advice on everything at once – think of it like building a house. It’s much easier to build everything at the start than to renovate. But there are a number of reasons why you might renovate.
You can’t afford to do everything at once. You’re quite happy with what you’ve got, but just need a new kitchen – or you are willing to take on some parts of a renovation/build yourself. From a planner’s perspective, if they do everything, they can make sure no unintended consequences are missing (like building a bathroom when you actually need to put stairs in down the track). It will also normally be cheaper in the end to do it once, rather than in piecemeal.
So what’s this got to do with accountants and licensing? Accountants currently hold a coveted relationship with these coach seekers and controllers. They’re comfortable with this sort relationship where they educate their clients to help them make informed decisions.
I believe accountants could be the key to servicing the clients of tomorrow as these clients are predominantly coach seekers and controllers, who are looking for advice in bite sized chunks – and accountants are comfortable and skilled in providing advice that way. If accountants embrace licensing and scaled advice, this could completely revolutionise the advice landscape in Australia.