The drive for ‘professionalism’ has received a lot of focus over the period since February when the Royal Commission reported – most of it on the impact on individual advisers.
The changes that professionalism has caused have led to a good deal of disruption within advice practices – the institutionally-owned obviously – but in the independent practices as well. A good deal of this has been a focus on developing viable business models and revenue generation.
But let’s assume from now on there will be a viable business model for advice, where a substantial pool of Australian households will be prepared to pay for advice.
This means we can focus on another aspect of ‘professionalism’, which has received less attention, and that is ‘professionalisation’. That is the requirement for advice businesses to conduct themselves as professional businesses would – to manage each aspect of the business in a professional way.
This applies to every aspect of the business including:
- Recruitment;
- Adviser and personnel management;
- Operations;
- Insourcing versus outsourcing decisions;
- How investment portfolios are developed;
- How those investment portfolios are translated into individual recommendations; and
- Ongoing client service models.
In 2018, IMAP, in conjunction with Business Health, undertook a study of the attributes of profitable practices and this showed that the practices that achieved higher profitability were those that already operated in a more structured way. For example, this meant:
- Better developed value propositions;
- Clearly documented review processes;
- A conscious client engagement process; and
- Clearly articulated client segmentation.
IMAP has seen in three of our four areas of focus – Advice, Technology and Investment – the impact of this professionalisation.
For example, IMAP’s newly established Portfolio Management Group recognises that increasingly, the task of developing investment portfolios is the responsibility of specialists within licensees who might, in earlier years, have worked in research houses or investment managers.
The increasing proliferation of technology offerings means that advice businesses can approach technology as a conscious decision, with a wide range of providers offering specialist capability.
So, in 2020, IMAP will be focusing on ‘professionalisation’ and this means asking questions like:
- What does it mean to run and advice business in a professional way?
- What capabilities do business principals need to obtain to ensure their business vision is delivered profitably?
- What does it mean to manage professionals?
- How do you offer investment solutions that are most likely to achieve client outcomes?
Toby Potter
Chair