A brave new world for financial planners March 2021

Recep+peker

Former Investment Trends research director Recep Peker started up his new business Empower Business Advisory in January this year and has had so much demand already needs to consider hiring people. He spoke to Industry Moves about some of the biggest challenges facing financial advisers and the investment industry.

You have an intimate knowledge of the financial planning space, what are some of the biggest challenges facing financial planners in the current environment?

The big move in recent years is towards self-licensing and this trend is likely to continue, holding all else constant.

So, for a lot of advisers, it will be learning how to run their own business and setting things up for success. I’ve been talking to quite a few advisers and there are many who are doing really well. There is an initial phase where they have to be purposeful with their vision and invest in setting up the business appropriately. If they do this well they end up feeling fulfilled in both their professional and their personal lives.

Looking at the broader industry many of the challenges are similar to what you’d find in any business - how can we get more efficient so we can service more clients or reduce our costs, how can we set things up so that our clients feel they get enough value so they stay, and so on. It’s essentially maintaining the flow of new clients and being able to service the existing clients effectively.

There is a trend towards advisers servicing higher and higher value clients. A high value client is a high touch client, and many advisers expect to overservice them and meet a wider range of needs, even if it falls out of the scope of the traditional financial advice relationship.

But they also have this challenge where, if one of their clients refer their kids to them who might be relatively low balance, how do these advisers service those clients profitably. If you have wealthy clients you’re servicing many are finding you can’t just say ‘no I’m not going to take your kids because they fall out of the scope of what I do’. And that’s hitting the bottom line of some financial advisers because they have to do the full SOA and full investment process. So, a key challenge is servicing the lower end efficiently.

What are some other industry trends you’re observing?

If you look at the investment platforms side of things it’s a very competitive market. It has always been a very competitive market because there is a limited pool of financial planners.

What happens with a platform provider, or with any super fund, is once you get to a certain size you end up having a lot of pension business, people drawing money from the platform. So unless you have a lot of new business coming in, unless you’re able to maintain a strong funnel, inevitably your outflows are going to be greater than your inflows. And that’s just the nature of superannuation, every superannuation fund faces the risk of getting to the point where the majority of their members are retired, because we have an aging population.

For retail investment platforms that’s one of their challenges - how do they remain competitive so they can keep the inflows of new clients strong and robust.

As part of this there is a focus on revamping the platform technology, bringing it up to the 2020 standards, essentially from what they might have built in the 2000s. The idea with modernisation of course is you want to make sure you have the best solutions for the current environment.

To see an example of this you can look at consumers. They do a lot of their stuff on a mobile device, but when you look at platforms for many the mobile offering is fairly limited. So one competitive opportunity is to build a more immersive client facing mobile experience.

Why did you decide to start up Empower Business Advisory?

If you go back to the beginning, I started my career in financial planning. The reason I started in financial planning is because I really wanted to help people to financially have their best lives and futures. But after a few years of doing that I realised that I was only helping one family at a time.

From there I moved onto Investment Trends where I could actually help businesses that touched the lives of many many people in one go. For example, if I help AustralianSuper with something that’s 2 million plus people whose lives are effected.

More recently however, what I have seen is that many executives that I work with have the challenge of having too limited time for executing on the insights and data that they’re collecting as a business.

Everyone has just been so flat out, especially since COVID, they just need help with the strategic decision making process. So, my proposition to the market is to take problem solving part and help empower you with the ability to make the best strategic decisions for your organisation. That’s a proposition that has really resonated.

What are your growth plans?

The level of interest is so high. I set up the firm in January, announced its launch in February and already I’ve had a lot of demand come through. I’ve been very fortunate in that regard and will need to start hiring soon so can I meet the demand.

What has been the most enjoyable thing about the new business?

I’m just enjoying every aspect of it. There has been a steep learning curve because of all the ‘running the business’ aspects of having a business, which I wasn’t involved in before, but coming up to speed with this has been quite fun. My main thing is that I have been very fortunate in the level of appetite I have had for my services. Because I am passionate about helping executives and people, the most enjoyable thing for me is that I can actually realise my passion while running my new business.

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