"The shift in industry is a lot greater than the public would know about." Centrepoint Alliance CEO Angus Benbow January 2020

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The financial advice landscape is changing rapidly in the wake of the Royal Commission. From significant revisions to commission structures to banks moving out of the space entirely, the industry is already looking significantly different today than it did in years past. And, more changes are likely coming.

Centrepoint Alliance has made significant strides in revising how it does business. It was the mandate for CEO Angus Benbow, who was appointed in April of 2018. He shares his learnings with Industry Moves, including ways that advisers can adapt and find success on their own.

The following is an excerpt from an interview that will be launched with the Industry Moves podcast in early 2020.

Centrepoint Alliance recently decided to change its service and pricing models. What was the rationale for this?

We started the process back in June of 2018 before any of the recommendations came through from the Royal Commission or even the release of the interim report. I was new as the CEO and I came in with a transformation or turnaround mandate. We wanted to focus on the principles of trust and transparency, being really clear about aligning the value of our services to our revenue model.

Advisers were heavily subsidised by historical rebates or margins through some packaged products. The conversations were difficult as we were fundamentally changing the revenue model that was in place. However, we began our conversations early (over 18 months ago) to ensure advisers were well informed about why we were changing the model. I think that's why we had a very successful transition, with 86 per cent of licensed advisers coming across to the new transparent fee structure.

Did you worry that you were making changes too early, that the government could come back in and change things again before implementation?

I think those advisers who look at their practice as a business are the ones that thrive. These advisers are focused on issues such as sustaining each of their revenue streams, managing their expense base and finding the right partners for their business. They are the ones that succeed.

When advisers are spending money on a licence, they want to see what they are getting. Some are going to the lowest price offering, but those advisers are not necessarily looking at their business through a long-term lens.

We offer scale in the services we provide and breadth in terms of the number of services, so we can meet the needs of advice businesses as they evolve.

Whenever you’re making changes, even ones that are going to be a positive in the long-term but may involve some pain in the short-term, there can be pushback. How do you manage that?

You can’t expect acceptance of change to happen overnight. That’s the first thing.

It’s the classic cliché of bringing people along on the journey. From an internal Centrepoint perspective, we took two to three months to work together with staff on what we were doing and what the future should look like. Our staff and advisers then came up with solutions and we built our strategy around that.

When we got to the point of having difficult conversations with advisers and walking them through the changes, all the staff who were involved clearly understood why we're doing what we're doing because they were a part of designing the blueprint.

The same thing with advice. We didn't just go out to advisers and say, ‘this is the new pricing, this is what's going to happen’. There was a six to nine-month process where we were engaging advisers, conducting workshops, and also recognising that we needed to improve the services we were providing.

Rather than just telling advisers that our fee model was no more subsidisation, we also explained how we were changing things to make our business better suited for them. For instance, we have invested in training and education to help both advisers and the business.

You say you serve mid-sized and small businesses. There’s an inherent entrepreneurial mindset for that type of individual. What are the sort of characteristics of those who succeed when they come into your type of model?

I think those advisers who look at their practice as a business are the ones that thrive. These advisers are focused on issues such as sustaining each of their revenue streams, managing their expense base and finding the right partners for their business. They are the ones that succeed.

When advisers are spending money on a licence, they want to see what they are getting. Some are going to the lowest price offering, but those advisers are not necessarily looking at their business through a long-term lens.

We offer scale in the services we provide and breadth in terms of the number of services, so we can meet the needs of advice businesses as they evolve.

With the constant state of flux around regulation and licensing, how does an adviser make those long-term plans?

It comes back to principles and values. What type of business do we want to be? What are the values on which we want to run the business?

In what I would call a reasonably chaotic environment at the moment, you do need to accept that you're not going to get everything right. But, if you lead with principles and have a plan, you're going to get the things that matter right.

Then, it comes back to how you lead your team and the responsibility you give individuals that enables them to be resilient, adapt and overcome challenges as they come up. It’s made a lot easier if they've got principles to align to, and values and behaviours that they can come back to around how to run their business.

We in the industry see the Royal Commission as being something of a sea change in how we do business. Does the public reflect that view?

Without empirical evidence, I can’t know. What I would say, based on conversations I’ve had with advisers, financial advice clients, and my own friends and family outside the industry, is that the shift or the significance for us as an industry is a lot greater than the public is aware of.

We were already such a regulated industry, such a technical industry in terms of legal compliance. The amount of change that’s happening at present is enormous. I’ve never seen this amount of change. Does the public perceive that? I don’t think.

If I think about it purely from an advice perspective, when you look at ASIC reports on consumer sentiment [for example Report 627 Financial Advice: What consumers really think], those clients who have an adviser trust that adviser. For those clients, I don't think a great deal has changed. And anecdotally, what I’ve heard from advisers is that many have been contacted by clients who are saying: “I’m just thankful I have you as my adviser.” That sentiment is why we remain positive about the future of the financial advice industry.

View Angus Benbow's profile