The power of connecting

Martin Morris discusses the importance of keeping your business healthy and keeping your clients engaged in today’s digital world.

Technological innovation is driving change across all businesses globally, specifically in how a business deals with its customers.

The advent of smart technology and social media has forced businesses to adapt. Customers now have a greater voice if they are unhappy with a company’s products or services. Posting a tweet or commenting on a company’s social media page can often get a quicker response than the traditional customer service channels.

Customers are demanding more; more information, better service and more engaged relationships with organisations. Those firms that aren’t embracing technology to better connect with their clients are falling further behind.

So, what does this mean for the financial planning sector, where customer relationships really are the core of an advice proposition?  

The cornerstone of the financial planning relationship

Head of Distributions 


Every client of a financial planning practice has unique characteristics that affect how they behave and how they interact with others. Therefore, to ask a planning practice to connect successfully with each of its clients is a tough request, yet only those practices that build strong relationships with a large proportion of their clients will grow and endure.  

Trust is the foundation of a strong relationship between a planner and their client. Humans have a natural disposition to trust and to assess trustworthiness, which the financial planning industry can use to its advantage.

However, the planning process is not finite – there are many factors that influence the outcome of financial planning strategies that are out of the control of the planner and their client.

Therefore, in order to hand over control of their wealth management and potentially their future livelihood, the trust a client has in their planner must be strong enough to counteract these intangibles.

In the pre-FSR (2001) era, it was possible to commit a much larger portion of a practice’s time to being in front of clients. Financial planners of this era were often more adept at using soft skills to understand clients and adapting their advice approach accordingly, as they had the time to focus on and hone these skills.

It can therefore be assumed that, due to the greater time available, it was relatively easier to attain and maintain trust in the planner client relationship.

However, time and resources are factors that few financial planners have in abundance post-FSR. To add to a financial planner’s time and resource limitations, the Global Financial Crisis had a significant impact on the way trust is created and maintained in this complex planner-client relationship.

Transparency and control are increasingly becoming a requirement across new client demographics, but also amongst current investors who previously may have handed the management reins to their planner, being content with one review a year.

So, today, building enduring trust is becoming harder.

So, what is the answer to this quandary?

Trust is typically built when a client feels that their planner is putting their needs first and is keeping them informed. Communication is key to this and technology can play a significant role in building trust and enhancing the planner/client relationship. Communicating with clients in the way they want to be communicated, and with the level of detail and personalisation they are looking for, is also important.

Enhanced adoption of technology is the quick and readily given answer. However, a tough reality is that technology and access to knowledge is advancing faster than business models are adapting.

Technology advances and business model adaption at a disconnect

Time Magazine named 1982 ‘The year of the computer’. By 1983, 10 million PCs were in use, and by 2014, PC usage was up to two billion.

As the hardware market matured, the internet was equally growing and in 1995 it exploded into the mainstream with 16 million users (0.4 per cent of the world population). Extraordinarily, by June 2017, it had grown to 3.89 billion users (51.7 per cent of the global population).

If that wasn’t enough progress, we then saw the advent of the mobile phone, yet another way to connect, and by 2013, UN research showed there were six billion people of the world’s population of seven billion, who had a mobile phone – a larger percentage than those who had a toilet!

It is incredible how much information is now accessible on the internet and at the fingertips of the research savvy and knowledge thirsty.

By the end of 2016, global internet traffic was 1.1 zettabytes per year. To put that into perspective, one zettabyte is the equivalent of 36,000 years of high-definition video.

So, what does this mean for Australia?

At the beginning of 2017, there were 13.5 million internet subscribers and 17 million Facebook accounts from a population of 24.4 million. At that stage, Australia also recorded a growing, and not surprising, statistic that 40.44 per cent of internet usage is via mobile and a dwindling share of 59.56 per cent through desktop.

With technology connectivity advancing at such a pace, as an industry, we need to ask ourselves a couple of hard questions:

  1. Have our business models adapted at the same, or a reasonable pace, to keep up with this innovation and change of consumer behaviour; and
  2. Is the industry having a positive enough impact on the wider Australian population to materially increase the number of people seeking financial planning advice?

Unfortunately, time and resource restrictions have been an easy excuse for many within the planning community and provided them with a reason to continue as they always have done. Many are maintaining their current models with a focus on retention, rather than any real substantial growth.

It could be argued that the ageing planner base in Australia are themselves transitioning to retirement, with neither the drive nor energy to deliver change within their own business. Or, that many larger AFSLs are finding the revenue pressure post-FoFA a deterrent and barrier to investing in innovation within their network.

Either way, the cold reality for the industry is there does not seem to have been any real net growth in financial planning clients since the ASIC study in 2009/10, which stated that as little as 20 per cent of the population seek financial advice.

Therefore, all that can have really happened is existing, unhappy clients have switched planners, or a planner is acting as a disaster recovery agent helping a self-directed client to dig themselves out of a financial or strategic mess.

Unfortunately, the high retention rates only help to support this apathy amongst practices. There is little motivation to provide their clients with enhanced connectivity, control and transparency if they convince themselves that it’s not needed. Social media isn’t deemed relevant for their business due to the belief that an ageing client is not technologically connected. This overlooks a significant social change that is occurring that may force an adjustment in their thinking.  

With more baby boomers retiring, the grey nomad community increases in number. Luxury caravans mean significant wealth will literally congregate around the proverbial campfire at night, whilst chasing warmer locations. If not driving through the bush, a larger portion of retirees are flying across the world to find warmth and adventure.

This leads to a couple of obvious questions:

  1. What sort of planners will get the most positive feedback and referrals? Those who have developed connected client bases or those whose clients need to chase them to work out their finances or gain ad hoc portfolio information?
  2. Which clients are most at risk of seeking alternatives?

Regardless of this retention apathy and the average client-base age of practices, the generic client engagement model has not advanced much in over a decade. There have been small incremental changes, as planners add components of technological advancement at different stages of the advice value chain. However, they have all been predominantly to the benefit of the practice.

Many platforms continue to focus their attention on servicing the planner to the detriment of building really engaging investor portals. As other industries drive a more dynamic customer experience, the planning industry still lags behind conservatively at the point where planner clients connect.

So, what is the outcome of all this?

  • From an investor perspective, the client engagement experience has remained consistent, even though consumers are changing the way they request and consume other professional and retail services.
  • Client bases are more at risk than ever before and planners need to be careful not to react only when clients begin their exit process.
  • Increasing numbers of investors early in their financial journey are experiencing online education and services to address their investment or financial strategy needs. This encourages them to remain self-directed for longer, thereby reducing the client prospect pool significantly.
  • General referral rates of many practices remain low, as client are uninspired by their own experience, even though they may stay due to trust in their planner.
  • As the financial planning industry continues to fall behind other industries’ use of technology, its value proposition will continue to be eroded and our ability to increase the usage of planners by the general population will be hindered.

Of course, the more established and mature a practice is, the harder it can be to transition into this digital age. The options available can make it seem extremely overpowering and paralyse a planner from making progress, which is understandable, but until change is implemented, it will remain a risk to the business.

Managed accounts on their own are just an investment solution with benefits to both the planner and investor. The golden egg is using managed accounts in conjunction with investor-focused managed account technology to address this conundrum of client connectivity.

Of course, there are still some embedded habits by planners of internalising the opportunity of managed accounts, considering the benefits around reduced compliance requirements and possible enhanced margin opportunities.

However, the real power of harnessing managed account technology is when planners engage and connect with their clients to create exceptional wealth management experiences.

When focusing on a review or implementation of managed accounts, a planner should steer away from ‘internalising’ the benefits. Harnessing the technology to drive connectivity and keeping the client experience as the cornerstone of the advice process, will yield a greater level of business benefits, as seen in Table 1.


As a planner works through their managed account opportunity, it is important to include their technology partner and to ensure they understand the breadth of functionality at their fingertips.

Reviewing the client engagement experience will also allow a planner to ensure that the technology will, in fact, address all the points listed above and not just deliver a similar client experience to that under a pre-managed account advice process.

Martin Morris is Head of Distribution at Praemium.


Next Events

IMAP Specialist Webinar Series - Investing Outside the Mainstream

Webinar series – Investing Outside the Mainstream

Join us at midday on each of the 3 days to hear from experts on


Monday 29th April 2024

Illiquid investments
‍Industry Super accounts for nearly two-thirds of the Australian Superannuation assets and most have meaningful exposure to unlisted private assets with varying degrees of illiquidity does this mean retail investors should also have exposure to these types of investments, if so how can the industry facilitate this?

To discuss this and more is John Julian - Dexus Infrastructure and Michael Karagianis - JANA Investment Partners.
Moderated by Paul Saliba from SQM Research

Tuesday 30th April 2024

Private Markets (equity and debt) 

Discussing this topic are Russel Pillemer CEO of Pengana and Zivan Wong - MLC.
Moderated by Paul Saliba from SQM Research

Wednesday 1st May 2024

How do we assess the quality of investment management and the role in portfolios?

Discussing this question today are Lachlan Brumby - Russell Investments and Jason Petras - Resonant Asset Management.
Moderated by Chetan Trehan - SQM Research


Registrations now open please use Registration Button below you only need to register once for the series of 3 webinars the same link will work for all 3 webinars

Webinar Series CPD Accredited for 3 hours approx

IMAP's Managed Account Awards 2024 are here.

Optimising Clients' Portfolios in 2024

The IMAP 2024 Managed Account Awards provide our industry the opportunity to recognising best in class for Managed Account Licensees, Boutique Licensees, Innovators, and Investment Asset providers plus Responsible Investing Portfolios.

The Awards have showcased a wide range of providers who are recognised for their work and accomplishments. (see IMAP Past events for more details)

Entries are now open until Monday 27th May 2024.

IMAP wishes everyone the best and please ask the Awards team how we can help

Contact us

This email address is being protected from spambots. You need JavaScript enabled to view it.


0414 443 236