WP 1.01

MARK BOURIS THE APPRENTICE HOST ON THE VALUE OF ADVICE

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BUSINESS STRATEGY THE ULTIMATE GUIDE TO RUNNING YOUR BUSINESS

ISSUE 1.1

TOP

LEANNE MCDONALD AUSTRALIA’S TOP FEMALE PLANNER

ADVISERS

AUSTRALIA’S BEST FINANCIAL PLANNERS REVEALED >>

CONTRIBUTORS

We consulted with the world’s top business minds to create the Wealth Professional: Business Strategy report. Turn to page 27 JIM SHARPE SENIOR LECTURER OF BUSINESS ADMINISTRATION, HARVARD BUSINESS SCHOOL Jim Sharpe is a Senior Lecturer in the Entrepreneurial Management unit. He teaches a second year elective on turnarounds, and the entrepreneurial manager, a first year required course. His interests are in the areas of business acquisitions, manufacturing, B2B niche marketing, turnarounds, pricing, leadership, family balance, large/small company differences, ethics, exit strategies and employee empowerment.

ANTOINE HERMENS HEAD OF MANAGEMENT DISCIPLINE GROUP, MANAGEMENT CORE MEMBER, CENTRE FOR CORPORATE GOVERNANCE, UNIVERSITY OF TECHNOLOGY SYDNEY Antoine M J G Hermens MBA (Macq), fellow of the Australian Institute of Management and fellow of the Australian Marketing Institute, is the executive MBA director at the University of Technology Sydney. Antoine spent the first 16 years of his career as a manager and executive in a range of companies in the retail, car and tyre industries. In this period he reached CEO of a joint venture company. Antoine is multi-lingual and draws on extensive commercial experience in his role as an academic and advises a number of national and international clients on strategy and alliance management.

DON O’SULLIVAN ASSOCIATE PROFESSOR – MARKETING, MELBOURNE BUSINESS SCHOOL Don O’Sullivan joined the faculty at Melbourne Business School in 2008 from University College Cork, Ireland. Don’s principal academic interest is in the impact of marketing activities on company performance. His research has been published in the European Journal of Marketing, and the Journal of Marketing among others, and his case studies on technology marketing are taught in business schools across Europe.

Don is an active member of the Chief Marketing Officers (CMO) Council of the USA. Since 2003 he has led the Council’s Marketing Performance Measurement research program, and is a co-author of the Council’s Report on this topic.

TOM RICHARDSON MANAGING PARTNER, DELOITTE LEADERSHIP ACADEMY Tom qualified as an accountant, an investment banker, a Master of Business Administration and a strategy consultant before realising business succeeds because of people not Powerpoint. After 15 years as a consultant with Arthur Andersen, Bain International and most recently Deloitte, Tom advised Australia’s leading organisations on operational excellence and growth. Tom identified as a consultant the need for leadership capability to realise performance improvement in business and hence founded the Deloitte Leadership Academy. With over 3,000 Australian business leaders using the DLA, Tom has unparalleled insight into the use of cutting edge techniques to cost effectively and pragmatically develop our future business leaders.

MAARTEN BOS POST-DOCTORAL FELLOW OF BUSINESS ADMINISTRATION, HARVARD BUSINESS SCHOOL Maarten Bos is a post-doctoral research fellow of business administration in the Negotiation, Organisations & Markets Unit at the Harvard Business School. He holds a PhD in Psychology from Radboud University Nijmegen and a BA in Psychology from the University of Amsterdam.

1 | AUGUST 2012

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EDITOR’S LETTER COPY & FEATURES EDITOR Robin Christie MANAGING EDITOR Trevor Treharne JOURNALIST Cameron Brown CONTRIBUTORS Jill Fraser, Charles Beelaerts PRODUCTION EDITORS Sushil Suresh, Moira Daniels, Carolin Wun

ART & PRODUCTION ART DIRECTOR Jonathan Phillips SENIOR DESIGNER Rebecca Downing DESIGNER Ginni Leonard

SALES & MARKETING NATIONAL SALES MANAGER Peter Smith COMMUNICATIONS MANAGER Lisa Narroway MARKETING EXECUTIVE Anna Keane TRAFFIC MANAGER Abby Cayanan

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MANAGING DIRECTOR – BUSINESS MEDIA Justin Kennedy CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil CHIEF EXECUTIVE OFFICER Mike Shipley DIRECTOR Claire Preen CHIEF OPERATING OFFICER George Walmsley Editorial enquiries Robin Christie tel: +61 2 8437 4787 robin.christie@keymedia.com.au Advertising enquiries National Sales Manager Peter Smith tel: +61 2 8437 4740 peter.smith@keymedia.com.au Subscriptions tel: +61 2 8437 4731 • fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media keymedia.com.au Key Media Pty Ltd, Regional head office, Level 10, 1 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 • fax: +61 2 9439 4599 Offices in Singapore, Hong Kong, Toronto wealthprofessional.com.au Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Wealth Professional magazine can accept no responsibility for loss

Hello and welcome to the launch issue of Wealth Professional magazine, Australia’s newest quarterly title dedicated to the country’s financial advisers.

There’s no doubt that the financial advice industry is going through a turbulent time.

The controversial Future of Financial Advice (FoFA) reforms have generated a great deal of debate within the industry, and the passage of FoFA is something that the Wealth Professional team has been keeping a close eye on in recent weeks.

But despite the regulatory changes that have been shaking up the financial planning industry, and the overseas economic uncertainty that has been hammering the share market, Aussie planners who have adapted and rolled with the punches have still managed to create new business in this tough market. Our inaugural Top 50 feature celebrates those planners who have succeeded against adversity. Turn to page 16 to find out who made it into the Top 50, and discover their top tips for success.

Speaking of top tips for success, this issue of Wealth Professional is packed with business advice aimed at informing you how to thrive, not just survive, in the current market. On page 12 we have an exclusive interview with Yellow Brick Road executive chairman, and star of The Apprentice Mark Bouris, which unveils his secrets of success.

Flick to page 27 and you’ll discover our complete Business Strategy guide, which we have no doubt will provide you with food for thought regarding how your practice can succeed in uncertain times.

As always, Wealth Professional is committed to bringing you, the financial planner, the essential news of the day. Feedback is a vital part of what we do, as is highlighted by our Forum Forces digest on page nine. What do you want to read about? Who should we be speaking to? Perhaps you would like to contribute to Wealth Professional yourself, or simply comment on our daily news.

Head to www.wealthprofessional.com.au to let your thoughts be known.

Robin Christie, Editor, Wealth Professional

CONNECT

Contact the editor: Printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry

robin.christie@keymedia.com.au AUGUST 2012 | 2

CONTENTS

12

9 NEWS ROUND-UP 6 | The Big Five The biggest stories to impact financial planners 8 | Online polls What you think of the big issues 9 | Forum Forces The best of our online soapbox 10 | Product news What must you be offering right now?

FEATURES

27 | Business Strategy The ultimate guide to how running your business 28 | Game plan Do you have a strategy for business growth?

34 | Marketing forces The challenges as you market your business 40 | What makes us tick?

Understanding yourself and your employees 44 | Financial industry stats The latest trends in the market

4 | AUGUST 2012

12

ESSIONAL OF

20

16 | Top 50 Advisers The inaugural Wealth Professional awards of Australia’s best financial planners

WEALTH P R

12 | Mark Bouris The Apprentice host tells us why Australia’s small businesses are so important

A D V IS

ER

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TOP

5

ADVISERS 46

16 PLANNER FOCUS 46 | Planner Profile Leanne McDonald, the highest ranked female from our Top 50 48 | A day in the life Greg Cook, managing director and co-founder of Eureka Financial Group

WEEKLY INVESTIGATIONS

NOW ONLINE FoFA Industry debate

48

Superannuation

wealthprofessional.com.au AUGUST 2012 | 5

NEWS / ROUND UP

THE BIG

FRAUD

INVESTMENT FRAUD TOLL HITS $113M

FIVE The biggest news stories from wealthprofessional.com.au VOLATILITY

FIVE WAYS TO MANAGE MARKET VOLATILITY Taking risk off the table might not be the best strategy to achieve long-term goals, argues Fidelity Worldwide Investment’s Tom Stevenson. He suggests five ways to handle volatility: 1. Keep calm: Don’t overreact to volatility. Don’t respond more slowly than the markets as a whole. You will be late to the party when markets rise, and risk bailing out after markets have corrected, crystallising your losses.

2. Maintain perspective: The eurozone accounts for only around 10% of the overall market value of global stock markets. Even in Europe, many of the largest companies continue to do well, protected from local problems by successful worldwide operations.

3. Diversify: Spread investments between different asset classes, such as equities, bonds, commodities and cash. Government bonds in Germany, the UK and US have all performed well during the latest bout of equity volatility as investors have sought safe havens for their money.

4. Consider the price: Longer term what matters is the market’s valuation.

Look at the price you’re being asked to pay today. The average multiple of a company’s earnings that a share price represents is actually cheaper than at any point since the late 1980s. Only at the bottom of the market in March 2009 were shares much cheaper on this basis than they are today.

5. Stick with it: The beauty of regular saving is that it forces you to invest at times like these when the market has fallen and you instinctively prefer to walk away. Volatile markets create opportunities and a mechanical investment approach obliges you to take advantage of them.

6 | AUGUST 2012

DID YOU KNOW? APRA conducted five prudential reviews of Trio between 2004 and 2009, but took no enforcement action as a result.

A report from the Australian Crime Commission and Australian Institute of Criminology suggests that more than 2,600 Australians may have lost more than $113 million to investment fraud in the last five years, but the good news is that the Government is promoting the role of independent financial advice as a fraud prevention measure.

So who is the typical investment fraud victim? The report’s findings suggest that your male clients who are over the age of 50 are the ones to keep a close eye on – especially if they have an SMSF. “They are usually highly educated and have high levels of financial literacy. They are likely to manage their own super,” said Minister for Home Affairs and Minister of Justice Jason Clare.

And don’t be surprised if your clients soon come calling for advice on avoiding investment fraud. Clare has announced that his department will be raising awareness of the issue by issuing a warning letter to every household in Australia – the first time Australian law enforcement agencies have undertaken a mail out of this scale regarding serious and organised crime.

Financial planners will be pleased to hear that one of the key fraud prevention tips that the letters will contain is to always seek independent financial advice before making an investment.

Other recommendations include visiting www.moneysmart.gov.au; reporting suspected fraud to ASIC; and checking any company you are discussing investments with has a valid Australian Financial Services Licence.

NEWS / ROUND UP

RESEARCH

TOP JOB

IS FINANCIAL PLANNING REALLY THE WORLD’S FIFTH BEST JOB?

SUPER FUNDS SET FOR IMPROVED GROWTH

How would you rate your job satisfaction? An assessment of the world’s best and worst jobs has put financial planners at an incredible fifth place.

According to CareerCast’s 2012 rankings of the 200 best and worst job titles, financial planners are only beaten to the top spot by dental hygienists (4), human resources managers (3), actuaries (2), and software engineers (1). So what makes financial advice so appealing?

The 200 job titles were ranked according to several categories – including income, work environment, stress, physical demands and hiring outlook – with the lowest scoring job coming out on top.

Financial planners scored a total of 300, which put them a fair way off beating first-placed software engineers – who only amassed 176 points, but light years away from last-placed lumberjacks – who scored a depressingly high 1,7776 points.

In case you were wondering, the rest of the bottom five consists of dairy farmers (199th place), enlisted military soldiers (198), oil rig workers (197) and newspaper reporters (196).

Super funds have been tipped to be amongst the industries that will “fly” this financial year, but growth is expected to lag behind diamond mining and preschool education.

According to IBISWorld, superannuation funds are expected to grow by 21.2% during the 2012/13 financial year. This growth figure puts super at number four on IBISWorld’s list of the top five “industries to fly” this financial year.

Super beat fifth placed organic farming (14.9%), but sits behind preschool education (26%), electricity generation (28.7%) and diamond and gemstone mining (35.6%).

According to IBISWorld, after four poor years, a return in confidence and favourable investment conditions will prevail in 2012/3.

The expected 21.2% growth in the superannuation funds industry would see its value reach $232.8bn.

“This growth will be off a low base, following the revenue decimation experienced during the global financial crisis,” said IBISWorld general manager Australia Karen Dobie.

DID YOU KNOW? The Australian Crime Commission estimates that, over the last five years, more than 2,600 Australians have lost more than $113m to investment fraud.

DISTRUST

74% OF AUSSIES DON’T TRUST FINANCIAL PLANNERS No matter how much you strive to go about your business with honesty and integrity, it would appear that the majority of Australians won’t believe you if you tell them so.

According to this year’s annual Image of Professions survey from Roy Morgan, financial planners are only the seventeenth most trusted of the 30 professions that appear in the list – sandwiched between public opinion pollsters and directors of public companies.

Only 26% of respondents gave financial planners a ‘very high’ or ‘high’ ranking when asked to score the occupation for honesty and ethical standards. This was a

NURSES

90%

DOCTORS

83%

TEACHERS

80%

two per cent drop on last year’s score. It would appear that it’s been a bad year for the image of the financial services industry in general.

The score for accountants dropped from 54%–49% this year, bank managers saw their score slide by 4% to 37%, and insurance brokers are down 2% to 10%.

The least trusted profession for the thirty-first year running was car salesman (2%), followed by advertisers (8%) and real estate agents (9%). At the other end of the scale were nurses (90%), pharmacists (88%) and doctors (83%).

FINANCIAL PLANNERS 26%

REAL ESTATE AGENTS 9%

ADVERTISING PEOPLE 8%

CAR SALESMAN

2%

AUGUST 2012 | 7

NEWS / ROUND UP

ADVISERS MUST FIX BUSINESS OPERATIONS TO SURVIVE

TRIO: “THE REGULATORS STUFFED IT UP”

Business operations is a vital ingredient of success that must be fixed if your practice is to succeed in a postFoFA world, says Graham Peatey, general manager of practice management consultancy The Encore Group.

He believes that many financial advice practices think they’re ready to implement initiatives like fee for service, but lack the systems to make these initiatives work consistently and sustainably.

“Business operations doesn’t have the same wide appeal as, say, marketing or business strategy,” said Peatey. “I think this is why business operations are so poorly done across our industry. It can be tedious to invest time in the detail of mapping processes and ensuring they serve a business well.”

He has challenged advisers to ask themselves the following four questions about their existing business processes: Are they efficient? Are they scalable? Are they accessible to all staff? Do they consistently deliver on the client value proposition?

He added that, while software such as XPlan, Adviser Logic or COIN can be powerful tools for automating business processes, they are usually poorly used.

A representative of Trio fraud victims has attacked ASIC, APRA and the ATO for their alleged mishandling of the affair.

“No matter which way you look at it, the regulators stuffed it up and that’s about as polite as I can put it,” wrote Victims of Financial Fraud (VOFF) chairman David Bridge in a letter addressed to the Financial Services and Superannuation Bill Shorten and the media.

“Minister, we appeal to you that in the public and national interest, this whole sorry mess is one that could have been avoided or at least nipped in the bud in the early stages by the gatekeepers including APRA, ATO, ASIC, trustees, directors, AFSLs, custodians, auditors. Not just one of them, they all failed to do their job properly!!!”

The explosive attack comes in the wake of VOFF’s recent meeting with Shorten, at which VOFF demanded that all Trio investors are offered compensation without discrimination, APRA and ASIC are held accountable for improved performance and all Trio criminals be brought to justice.

DID YOU KNOW? Australia’s Real GDP growth in 2011 was 1.7%, compared to 2.8% in 2010

POLLS

How would you describe the track record of ASIC during the first eight years of the Australian Financial Services Regime? How would you rate the job it has done of protecting the Mum and Dad investors who are your clients?

12.5% 37.5%

12.5% 18.75%

18.75%

8 | AUGUST 2012

Excellent Good Mediocre Poor Very poor

Most of my pre-retirement clients’ strategies will need to be changed because of the concessional contributions cap changes

Agree Disagree

74% 26%

NEWS / ROUND UP

FORUM

FORCES What our online readers have been saying about the latest news

“What a shambles the superannuation system is under the guidance of these buffoons in Labor. Not only have they made a mess of contributions to super, providing a disincentive for retirement via this vehicle which their own party championed in the early 90s, they have capitulated to allow the union movement to dominate this vital topic, not in the nation’s interest from a fiscal point of view, but to satisfy the few in the union movement. Fair Work Australia is of itself a joke. This bunch of incompetents have no confidence in the business community and, with the leadership of this nation in shambles, the direction of Australia is looking more and more dire. Alistair, on Massive proposed shake-up of “biased” default super system “What a joke. Is there any other industry in Australia where you would need to do an exam to maybe continue working in your chosen field? I have already completed my qualifications and do at least 40 hours a year of CE training. How about just leaving me alone to look after my clients?”

Garry Black, on Define ‘financial planner’, exempt CFPs from new adviser exam, says FPA “This is going to correctly divide the wealth management system into two. Firstly, the product salesmen, that is most of the current “financial planners”. Their problem is how do you get paid for product sales if commissions are no longer payable? Do not worry, money has a habit of finding

its own way into people’s pockets. Secondly, the true adviser, but clients refuse to pay them for advice and this is why accountants come into this section because they get paid for accounting and give the advice away for free.”

Peter Vickers, on FPA labels accountant AFS licenses a business opportunity for financial advisers “Bill Shorten came to our attention on the back of the misfortune of the two Tassie miners who were stuck underground for two weeks.

Little did the financial services industry know what negative impact he would have on the hard working people who make up this vital industry. Given the two miners have crawled out from the rocks that covered them there seems a perfect opportunity for Mr Shorten to return from whence he came.”

Scott, on FoFA passed by Senate: what does this mean to you?

“These results should not surprise anyone.

The percentage of those rating us highly is the same percentage of the population that actually use a financial adviser. This means the remainder have no basis for judgment other than our public image. And, with the government, ASIC, ACA, ISN and mainstream media serving up bad news stories on us on a daily basis, is it any wonder they would form such a view?”

Wayne Leggett, on 74% of Aussies don’t trust financial planners

AUGUST 2012 | 9

NEWS / PEOPLE & PRODUCTS

PEOPLE & PRODUCT NEWS Movers and shakers: your guide to some of this year’s key appointments and product releases

friendly” SMSF drive, appoints Craig Jameson

Macquarie to sell COIN to Rubik Rubik Financial has announced that it has entered into a conditional agreement to acquire COIN Software Pty Ltd from Macquarie’s Banking and Financial Services Group.

As part of the agreement, Macquarie will continue to service the majority of COIN’s boutique clients, under a licence from COIN. “Our initial focus will be on delivering already committed product development programs and preparing our products for changes that flow from the Future of Financial Advice (FoFA) reforms. Beyond this, we will review technology opportunities based on customer feedback and market opportunity, whilst ensuring ongoing support to clients,” said Rubik Chairman Craig Coleman.

AMP steps up its “adviser 10 | AUGUST 2012

In a clear signal that AMP is taking the fast growing SMSF market increasingly seriously, the bank’s new SMSF business unit has recruited Craig Jameson to help lead its drive into the SMSF space.

AMP SMSF managing director Paul Sainsbury said that Jameson’s experience as former managing director of ANZ owned Super Concepts makes him an important addition to the AMP SMSF team.

“We are excited that Craig has joined our team – he has successfully led the second largest professional administrator in the market for a number of years and he brings to AMP a deep understanding of, and passion for, the SMSF market.

Jameson joins SPAA Chairman and former Cavendish managing director Andrew Hamilton on the AMP SMSF senior management team.

“AMP SMSF offers customers a choice in terms of administration providers, and in conjunction with the broader AMP Group, will develop customer and adviser friendly SMSF offers, to drive SMSF take-up,” said Jameson.

According to AMP, its new SMSF unit will initially focus on building scale to efficiently deliver SMSF administration services to external financial advisers, individuals, accountants and stockbrokers, as well as developing SMSF advice and packaged solutions for AMP’s

aligned distribution channels.

The establishment of the new unit, as well as the acquisition of Cavendish – the country’s largest SMSF administrator, according to AMP – represent a big push by the company to tap into what it has labelled the “largest and fastest growing superannuation sector in Australia”.

According to AMP, the SMSF sector’s current assets total approximately $430 billion, and are projected to grow to more than $2.2 trillion by 2031.

Avenue Capital Management advisers join Lonsdale Financial Group Dealer group Avenue Capital Management has agreed that all of its 30 advisers will join IOOF’s Lonsdale Financial group.

“In line with our desire to grow the Lonsdale business through quality practices, the addition of these 15 practices will significantly increase Lonsdale’s adviser footprint in the NSW market,” said Lonsdale CEO Mark Stephen.

Avenue Capital Management director Stephen Garrett added that he was attracted to Lonsdale due to its “open architecture and the level of autonomy they entrust in their practices”.

“Their practice management and business solutions,” he added.

Moneywise joint ventures with Fitzpatricks, appoints John McMurdo as chairman Moneywise has announced a joint venture alliance with Fitzpatricks, as well as the appointment of John McMurdo as chairman of the Moneywise board.

John has led national advisory firms including Centric Wealth and Hillross, as well as being general manager of life insurance at AMP (NZ).

The news came just days after Fitzpatricks appointed former Centric

WEALTHPROFESSIONAL.COM.AU

Wealth chief McMurdo, and Chris Cuffe, to its board of directors.

Hyperion Asset Management appoints new dealer/analyst

Australian equities fund manager Hyperion Asset Management has appointed Will Hartnell as a dealer and analyst.

Its Brisbane-based investment team now consists of 65 members. Hartnell will be responsible for execution of Hyperion’s

Chris Cuffe

equity trading, and for supporting the investment team by building on Hyperion’s research capabilities.

Before joining Hyperion, Hartnell spent five years with PwC – most recently in the mergers and acquisitions team.

“Will has a sound understanding of the Australian equity market through his experience in working with PwC. He is an extremely valuable addition to the investment team,” said Hyperion chief investment officer Mark Arnold.

Count Financial boosts executive team Count Financial has appointed Judy Clark into the role of senior executive responsible for practice development.

The move comes as Count makes significant moves to bolster its network of advisers, with nine practices and 24 new au-

WEALTH PROFESSIONAL PRODUCT OF THE MONTH: XPLAN

Planning software XPLAN, from IRESS, has been chosen as our product of the month for this issue, after it was revealed that it has increased its market share from 34 to 37 per cent.

The results, pubished in the Investment Trends 2012 Planner Technology Report, reveal that COIN has maintained a steady second place (23%), followed by midwinter (seven per cent) and AdviserCentral (6%).

The study, based on a survey of 1,412 financial planners, found that overall satisfaction with planning software reached a four year high: 55% of planners now rate their main planning software as ‘good’ or ‘very good’ – up from 52% in 2011.

thorised representatives joining the group throughout the month of June alone.

Count CEO David Lane has committed, however, to providing quality service and support to both new and existing practices.

“Judy’s appointment, together with the many other new service enhancements we have put in place to support our advisers over the last few months, demonstrates our commitment to maintaining Count’s reputation as the industry leading accountancy based licensee,” said Lane.

Count has also created a number of new roles in its adviser development team. A move that Clark believes makes it “an exciting time for advisers to be with, and want to join, Count”.

Russell to launch after-tax Aussie equities survey Russell Investments has launched a new Australian equities after-tax benchmarking survey designed to give superannuation funds and their fund managers “a simple and transparent way of measuring and ranking after-tax returns”.

Russell claims that the survey will provide an independent benchmark to measure and compare investment outcomes both on a pre-and after-tax basis, which is a requirement for super fund investors under the Stronger Super reforms.

“This will help superannuation funds compare managers based on after-tax, not just pre-tax, performance. The survey will also help fund managers to benchmark where their strategies are at and will pro-

vide valuable information to address their investors’ increased interest in how their portfolios, and Australian equities as an asset class, are performing on an after-tax basis,” said Raewyn Williams, Russell’s director of after-tax investment strategies.

The survey will report both the pre-tax returns of Australian equities strategies, and the after-tax return – adjusted for the tax value of franking credits as applicable to superannuation funds. Off-market share buy-back performance will also be reported. Equity strategies will be ranked based on after-tax performance rather than pretax performance as in traditional surveys.

Mercer adds Sovereign to its team Ray King and his Sovereign alternatives research team, Scott McNally and Sarah Azzi, have joined Mercer’s Investments – bringing the majority of their existing client base with them.

“Bringing Ray King and his team across to Mercer adds another key plank to our strategy of building the leading alternatives boutique in this region. It means we are strongly positioned to offer clients the skills and insights of a high-calibre team of private markets experts, in addition to our existing capabilities,” said Stephen Roberts, head of Mercer Investments in Asia Pacific.

With Ray and his team on board, we will be able to bring our clients even wider private markets coverage and deeper specialist expertise. These are capabilities that are going to be critical as investors continue to address market volatility and seek to diversify their portfolios to secure AUGUST 2012 | 11

HEAD TO HEAD / MARK BOURIS

Small business: THE UNTAPPED ADVICE MARKET Mark Bouris, executive chairman of wealth management firm Yellow Brick Road and star of The Apprentice, sits down with Trevor Treharne to talk small business success

I 12 | AUGUST 2012

t seems impossible to underestimate the value of celebrity in business. Just ask those TV chefs who have full restaurants every day. The same applies if you can be the business face of a global hit TV show. The Apprentice now has 24 international versions, from ‘De Topmanager’ in Belgium to ‘El Aprendiz’ in Columbia, famous finger-pointing bosses of the show include the UK’s Lord Alan Sugar and the US’s Donald Trump.

Here in Australia, we have a man who knows a thing or two about financial services. Former Wizard Home Loans boss Mark Bouris, who now runs wealth management firm Yellow Brick Road (YBR), has seen an unprecedented rise in national popularity. WP visited Bouris’ Sydney CBD offices to discover the secrets behind his approach to business, his passion for small Australian companies and how you can improve your advice business.

MB: One reason I wanted to start Yellow Brick

WP: What inspired you to start YBR, and what was

WP: What can and should change to help our small

your original vision for the business?

businesses flourish?

Road was that the Wizard Home Loans business had been sold to my opposition. Basically I decided I wanted to set up a business that I could work in, doing the only thing I know [financial services], but offering a broader range of financial service compared to what Wizard used to do.

WP: You have over 100 branches, each operating as a small business. Do you think there is enough support given to Australia’s small businesses?

MB: No. The small business community is somewhere between 2.7m and 3.5m people and there is not enough support for them. That’s precisely what Yellow Brick Road is about. It is about giving small businesses advice, helping them sell their business, buy businesses, finance businesses and making sure they have all the appropriate insurances in case something goes wrong.

WEALTHPROFESSIONAL.COM.AU

“We’ve got 2.7 million small businesses in this country; that is a huge market which is currently untapped” – MARK BOURIS

AUGUST 2012 | 13

HEAD TO HEAD / MARK BOURIS

MB: They just need advice. Small business is the loneliest place in the world to be, especially at the moment. They are all hanging out for advice, but they don’t want someone to sell them a product.

They are sick of people going up to them trying to sell them a mortgage, or trying to sell them a factoring product or some sort of insurance. They are saying: “Listen, can I just sit down with you to talk about how my business is pumping along and what my aspirations are for the next two years?”

They don’t actually know how to reach those aspirations. If they want their business to be worth $500,000 in two years’ time, they want to know how to actually get there. That business needs to know what to chase. You can critically analyse what they are going to do so they can achieve that, so they don’t waste any money and they can get close to hitting the number over the next three years. Small businesses will pay for that. You don’t have to be a trained accountant to give out that advice. You don’t have to be a licensed credit supplier or a business broker either. You just have to have a level head on you and understand how a small business works.

WP: What three aspects does every good business need to succeed?

MB: There is only one aspect that everybody

“The monoline product provider is going to find it very hard to survive over the next couple of years. You’ve got to have a multiline of products, so why not have a product or service that no one else is offering? That is small business advice” – MARK BOURIS

14 | AUGUST 2012

needs – somebody who will ask them the questions that they don’t get asked. Small business owners are very good at convincing themselves that they know best. They’ve got the answers but they’ve got to have someone to ask them the questions. That is what is not happening in this world today. Small business owners don’t think they can afford this, deserve it or need it. And they can afford it; it doesn’t have to be expensive. It doesn’t have to be a thousand bucks an hour, you don’t have to be talking to Warren Buffett, you don’t have to go and listen to Anthony Robbins. Everyone needs a different question put to them. What they need is someone to sit down with them and ask them the questions and say go away, get the answers, and let’s have a look at the answers. Let’s critically analyse your answers once I have given you the questions.

There is just a whole series of questions that need to be asked to these people. That’s our business, that’s our bread and butter.

WP: YBR has flourished through smart diversification – how do you manage that diversifying process? How do you evaluate a new market?

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MB: How do we do it? It is difficult! Most of our branch owners are small business owners. Most of our staff members have come out of small businesses. I came out of a small business! I know what people want; it is no different today to what it has been for 20 years. It’s just no one has bothered to look after small businesses. Australia has been a product environment. The world has been a product environment. It hasn’t been a service environment. So everyone has been pushing products at customers like loans, mortgages, insurance products and so on.

The world has changed, people genuinely need to have someone to listen to what they’ve got to say and help them along the way. Customers know about the products – it’s all over the internet and the newspaper, it is everywhere. You try and get small business advice on the internet though and you can’t get it. How do I sell my business? Well, the banks aren’t going to tell you that. If you go into the bank and say “can you help me”, you will get told to see a business broker.

But most people don’t even know to find a broker, what to expect from that small business broker, how to negotiate with a small business broker, what fees to pay, or what that broker will even bring to the table. Banks just don’t do that. In terms of us bringing our strategic products to the market place, it’s not that difficult because it is what we know the market place needs and has always needed.

What we did at Wizard 20 years ago was that we saw that no one really gave a damn about you when you were getting a mortgage. You just went and begged for it at the bank. At Wizard, we showed you how to get a mortgage and gave it to you at a better price. We are doing exactly the same at Yellow Brick Road today. We are saying to small business owners and business people generally that they should come in and see us, then we will help you navigate your way through what is a very tough environment. Let’s say we’ve got 2.7m small businesses in this country: that is a huge market that is currently untapped. Why compete with the banks on mortgage when you can compete with them with something that they don’t even offer a solution to?

WP: You are looking for new franchisees; what do you look for in your recruitment process?

MB: In an ideal world someone with mortgage and financial services experience, but frankly someone

HOSTING DUTIES WP: How much of your time does The Apprentice consume? How do you balance that with the day-to-day running of Yellow Brick Road?

MB: It is a lot of work, but The Apprentice is shot at the quietest time of the year. We do it in January, so everyone else is on holidays. I have the ability to film it whenever it suits me or find time that actually suits me best. And this is a seasonal business so generally it’s not that busy for us in January.

WP: What about the positive effect on your business? How has YBR directly benefitted?

MB: It has benefited us big time. I can’t explain how valuable it is in terms of what it does for our brand and what it does for our branches, it’s just huge. For us to get that level of exposure, in an advertising sense, we would have to spend $20m or $25m. Then it would take three years of doing that and we have done this in seven months. The first Celebrity Apprentice was done in October/November last year. People know what we do and it’s just come out of that and it has only cost us a couple of million dollars and most of my time.

who understands what we are trying to push here.

They need to be prepared to chase leads, originate deals and look after small business owners and then also sell all the products that float around it, be that a mortgage or life insurance.

Most of the people that are coming to us are coming out of the mortgage, insurance or financial planning industry. We tend to be getting all those sorts of types of people in equal amounts but it is probably more about what they are looking for, which is just to get out of the monoline.

The world has changed. The monoline product provider is going to find it very hard to survive over the next couple of years. You’ve got to have a multiline of products, so why not have a product or service that no one else is offering? That is small business advice.

WP: Are there any particular geographical areas where you are particularly keen to introduce new franchises?

MB: Everywhere! We like growth areas, we don’t want to be in areas where it is not going to grow.

We don’t want to be in an area which is like dead on a vine, you know, some sort of town out in the bush somewhere that’s got about three people in it, then no! But pretty much anywhere, we could open three hundred of these stores, there is room to do three hundred. That’s 15% of what Commbank has got.

We have also got this new concept of what we call agencies, so if you don’t want to open up a branch and you don’t want to have a shop, you can operate from home. You can become a Yellow Brick Road agent, just operating from home – one man, one person only. WP AUGUST 2012 | 15

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The time has come to recognise the country’s finest planners as we unveil Wealth Professional’s inaugural chart of the top 50 financial advisers in Australia. In a trailblazing initiative the industry’s top performers are finally rewarded for their excellence

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oo often the tireless and vital work that financial planners perform is overlooked in terms of recognition. Wealth Professional would like to put that straight. This issue is dedicated to making heroes out of the most hardworking and successful advisers in Australia, that is why we have launched with our rundown of the top 50 advisers in the country.

You had to enter to be in with a chance of being listed, but what was the methodology behind the rankings? The results are purely objective and based on fixed criteria of performance. The first two aspects we ranked were the increase of funds under management (FUM) in the 2011 calendar year and revenue the individual contributed to the business. Due to the vital role of these aspects these results were given a double weighting.

Other aspects ranked were client retention, new clients introduced to the business, new business as a percentage of total client base and FUM per client managed by the individual planner. This is all designed to provide a good cross section of well-rounded planners.

Thanks to all the advisers who took the time to enter and congratulations to all those who made the cut. As part of Wealth Professional’s wider ethos to not just inform our readers, but actively find ways to improve their business and profitably, we hope making the rankings will have a profound impact on your reputation.

We hope you enjoy the rundown and if you did not enter this year we hope that you will do so the next time.

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TOP 50 advisers OVERALL RANKING NAME

COMPANY

FUM 1 JAN

REVENUE FUM 31 DEC CONTRIBUTED

CLIENTS 1 JAN

CLIENTS 31 DEC

1

Justin Gilmour

Charter Financial Planning

$68,000,000.00

$122,000,000.00

$1,142,000.00

98

2

Charlie Viola

Moore Stephens Sydney Wealth Management

$190,000,000.00

$250,000,000.00

$1,900,000.00

126

205 145

3

Dr. Dennis J. Maddern

Maddern Financial Advisers

$150,000,000.00

$215,000,000.00

$4,000,000.00

2000

2500

4

Shane Nicholas

RetireCare Personal Wealth Management

$58,300,000.00

$75,000,000.00

$800,000.00

83

110

5

Anthony Stedman

Advice Evolution

$75,000,000.00

$95,000,000.00

$1,350,000.00

68

77

6

Chris Jones

State Super Financial Services Australia

$147,415,161.00

$173,712,468.00

$1,600,000.00

491

590

7

Richard Nicholls

Moneytree Partners

UNDISCLOSED

UNDISCLOSED

UNDISCLOSED

UNDISCLOSED

UNDISCLOSED

8

Neal Dunne

The Advice Exchange

$75,000,000.00

$115,000,000.00

$250,000.00

50

75 280

9

Brett Strong

Australian Financial Services

$48,000,000.00

$103,500,000.00

$783,000.00

350

10

Neil Kendall

Tupicoffs Financial Planning

$270,000,000.00

$299,000,000.00

$932,625.00

100

116

11

Andrew Williams

Professional Investment Services

$8,000,000.00

$15,500,000.00

$277,000.00

40

100

12

Leanne McDonald

AMP Financial Planning

223

13

Anthony Psarakis

Professional Investment Services

14

Grant Howe

15

$38,000,000.00

$49,590,747.00

$553,746.00

179

$47,451,068.00

$59,008,600.00

$446,736.92

170

218

RI Advice Group

$30,000,000.00

$40,000,000.00

$560,000.00

250

300

Matthew Armstrong

Genesys Wealth

$50,000,000.00

$60,000,000.00

$900,000.00

300

350

16

Christopher Heppingstone

Financial Wisdom

17

Tim Hartmann

Custom Wealth Solutions

18

Steven Nickelson

Garvan Financial Planning

19

Todd Burnell

NAB FP

20

Kane Livingstone

Stonehouse Financial Services

21

Nathan Barns

Barns Financial Services

22

Greg Cook

Financial Wisdom

23

James Gerrard

Charter Financial Planning

24

John Burke

$7,500,000.00

$18,000,000.00

$230,000.00

120

221

$22,000,000.00

$30,000,000.00

$450,000.00

280

350

$3,418,210.00

$8,193,980.00

$111,318.00

28

45

$60,408,223.00

$78,359,705.00

$554,767.00

154

172

$2,000,000.00

$4,000,000.00

$130,000.00

15

40

$18,944,623.00

$25,794,766.00

$282,797.00

153

216

$31,000,000.00

$39,000,000.00

$560,000.00

142

161

$1,500,000.00

$3,000,000.00

$100,000.00

15

40

Professional Investment Services

$30,000,000.00

$40,000,000.00

$500,000.00

300

350

$63,000,000.00

$71,000,000.00

$380,292.00

80

93

$4,000,000.00

$6,000,000.00

$60,000.00

20

35

$280,000,000.00

$280,000,000.00

$2,000,000.00

258

281

25

James Kenny

Tupicoffs Financial Planning

26

Adrian Boyd

Professional Investment Services

27

Phillip Smith

Lonsdale Financial Group

28

Jacob Aaslund

Australian Financial Services

29

Alan Littley

Charter

30

Chris Morcom

Hewison & Associates

31

Russell Medcraft

Self Managed Super Institute

32

Mark Dowling

Life Insurance and Super

33

Thabojan Rasiah

Shadforth Financial Group

34

Sally Kolbig

Peoples Choice Credit Union

$6,000,000.00

$10,000,000.00

$250,000.00

130

160

$250,000,000.00

$275,000,000.00

$2,600,000.00

1000

1040

$86,500,000.00

$93,500,000.00

$828,000.00

123

135

$130,000,000.00

$137,000,000.00

$2,245,000.00

11000

11031

$10,000,000.00

$12,560,000.00

$265,000.00

125

211

UNDISCLOSED

UNDISCLOSED

UNDISCLOSED

UNDISCLOSED

UNDISCLOSED

$50,962,932.00

$60,900,000.00

$564,000.00

380

420

35

Andy Hills

Aon Hewitt Financial Advice

$145,000,000.00

$168,000,000.00

$1,200,000.00

2300

2450

36

Richard O’Brien

A.F.S.

$290,000,000.00

$310,000,000.00

$935,000.00

622

647

37

Rami Elkassem

Commonwealth Financial Planning

$20,000,000.00

$30,000,000.00

$180,000.00

270

321

38

Michael Phillips

MD Phillips Associates

$100,000,000.00

$105,000,000.00

$1,500,000.00

250

260

39

Chris Kirkaldy

AMPFP

40

Brian Lucas

Charter FP

$12,000,000.00

$21,000,000.00

$175,000.00

650

760

$60,000,000.00

$72,000,000.00

$550,000.00

330

41

Robert Gould

350

Godfrey Pembroke

$21,000,000.00

$26,000,000.00

$250,000.00

130

42

142

Joel Bones

WHK Financial Planning

$50,000,000.00

$45,000,000.00

$800,000.00

105

130

43

Jake Ruse

Charter Financial Planning

UNDISCLOSED

UNDISCLOSED

UNDISCLOSED

UNDISCLOSED

UNDISCLOSED

44

Leanne Bull

AXA Finnacial Planning

$85,134,104.00

$87,363,744.00

$957,352.00

352

377

45

Andrew Prentice

RBS Morgans Limited

$68,000,100.00

$69,000,400.00

$1,070,651.00

103

105

46

Michelle Brisbane

Ethical Investment Services

$85,139,928.00

$92,599,921.00

$798,099.00

665

694

47

Simon Boylan

Hillross

$35,524,602.00

$34,458,195.00

$292,568.00

120

160

48

Paul Ellenberg

Australian Financial Services

$47,000,000.00

$51,000,000.00

$1,300,000.00

500

500

49

Chris Browne

Apogee FP

$80,000,000.00

$95,000,000.00

$350,000.00

500

537

50

Cameron Darrow

Fiducian Financial Services

$100,752,000

$93,191,000

$658,772

257

287

*THIS ENTRANT DECLINED TO HAVE THEIR FIGURES PUBLISHED

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*

*

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Name: NEIL KENDALL Company: Tupicoffs Financial Planning FUM: $299,000,000 Clients: 116

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Name: BRETT STRONG Company: Australian Financial Services FUM: $103,500,000 Clients: 280

Brett Strong

Q. What makes a good financial planner?

Q. What has been the best thing about the last 12 months?

genuine desire to help people, but is also someone who has the technical skills and knowledge to provide that help. The two are complimentary and I don’t believe you can be a great planner without both.

I would have to extend this answer to approximately two and a half years ago as this is when we really got serious about our business model. Our business model includes our accounting business, SMSFs and financial solutions businesses working together to integrate solutions for our clients, their families and associates.

In our experience the best thing has been the reengagement of our clients. As a business we decided early to move to direct fees and the government and industry fund advertising campaigns gave us high profile excuses to do so. We then set about engaging our clients on a number of different levels to ensure the best possible outcome for the client, the business and ourselves. The result has been exceptional service delivery, a systemised approach and client advocacy. The latter is the most important to any business or adviser.

A: A good financial planner is someone who has a

Q. What do you like most about being a financial planner?

A: It’s incredibly rewarding to make a meaningful and positive difference to the lives of the people that I see.

Clients come to me with a problem that, to them, seems insurmountable, and it’s satisfying to be able to respond and help by employing my technical skills and knowledge.

Q. What has been the best thing about the last 12 months?

A: The greatest challenge has also been the best thing

for planners. A lack of investment return has provided planners with an ideal opportunity to focus on other aspects of the service: reviewing client risk profiles, recalculating retirement projections, and revisiting goals and objectives. From this opportunity, many planners should emerge with a more holistic service suite.

Q. What is your top tip for other financial planners?

A: With FoFA regulations having begun, we have a new way forward, and planners’ opinions, either opposing or supporting the new regime, are effectively moot. Now, it is about moving on and implementing the regulations, rather than commenting or complaining about the implications.

What are your top tips for gaining, and retaining, clients?

There’s no debate that delivering outstanding service is the easiest way to gain and retain clients. By going over and above client expectations and being proactive with your advice, by presenting them with ideas or aspects they hadn’t addressed, clients will be happy to stay and happier to refer.

Neil Kendall

Q. What targets do you have for the coming year?

As a team we have only just finalised our 2012/13 financial year targets, budgets and outcomes in early June. The result of which is the collective agreement that we will continue as we are in pushing our review of existing clients, superior levels of client focused proactive service strategy in order to be privileged enough to work with our clients, their friends, families and associates. We are also looking to further expansion via the acquisition of additional accounting client registers. This will obviously depend on the quality of the asset and its geographical location.

Q. What is your top tip for other financial planners?

ACTIVITY. The more people you see the more work you will have. Followed by education and upskilling yourself and your team on every possible occasion. All staff in our office have completed at least their advanced diploma of financial planning including our administrative staff. This is important as every person in your team needs to behave professionally with clients occasion when dealing with clients.

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Name: NEAL DUNNE Company: The Advice Exchange FUM: $115,000,000 Clients: 75 Neal Dunne

Q. What makes a good financial planner?

Q. What has been the biggest challenge for financial planners in the last 12 months?

A: Understanding what a client’s true objectives are.

A: The last twelve months has really been about

Both parties should revisit these regularly.

Q. What do you like most about being a financial planner?

A: The diversity of client experiences. Our clients are

Richard Nicholls

successful in their chosen fields and helping them consistently make the correct financial decisions is rewarding. We also benefit from the experience of working with successful people.

Q. What has been the biggest challenge for financial planners in the last 12 months?

A: Filtering out the short term negative noise and being

able to articulate to clients a consistent macro view of investment markets.

The adviser in our Top 50 with the most clients was Russell Medcraft with 11,301

Q. How do you plan to adapt to the many regulatory changes that are set to affect the financial planning industry?

A: We will focus on having an efficient and profitable business where our clients pay us for our advice, everything else is out of our control to a large degree.

Q. What are the biggest issues facing the financial advice industry today?

A: Of real concern is what the industry will look like in five years’ time once the current industry consolidation is complete. This also represents an opportunity for privately owned independent firms to offer a viable alternative to institutionally aligned planners.

Q. What are your top tips for gaining, and retaining, clients?

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Name: RICHARD NICHOLLS Company: Moneytree Partners

getting back to the basics and ensuring that the strategies which have been put in place for clients continue to work in the uncertain economic environment. The lack of direction in relation to superannuation contributions from the Government has certainly made it a challenge for those over 50 clients who want to build their nest egg.

Q. What has been the best thing about the last 12 months?

A: While some may argue that the FoFA regulations have been the worst thing about the last 12 months, I feel quite the opposite. For those of us who have always worked to put clients interest first and worked under a conflict free remuneration structure it has been a great opportunity to further cement a position in the industry and clients certainly respond positively to this.

Q. What is your top tip for other financial planners?

A: We are confronting the biggest changes to the industry since the Wallis Report and we either need to adapt and survive or continue as normal and perish.

Q. How do you plan to adapt to the many regulatory changes that are set to affect the financial planning industry?

A: Having focused on building strong, long term

relationships with clients and working under a conflict free remuneration structure for a number of years I don’t expect too much will be required. If anything, the changes present a new and unique opportunity for the high quality, independently owned advice model to grow in place of the traditional product focused model, which has previously dominated the market.

A: Focus on the interests of the client first and

Q. What do you like to do outside of the office?

encourage your clients to regularly evaluate the value they are receiving from the relationship.

especially England beating Australia in the cricket.

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A: I enjoy watching almost all forms of sport –

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Name: CHRIS JONES Company: State Super Financial Services Australia FUM: $173,712,468 Clients: 590 Anthony Stedman

Q. What makes a good financial planner?

Q. What makes a good financial planner?

A: A generalist who can think analytically to ‘put the pieces together’ in view of the big picture. A clear and patient educator to help empower people to get their financial house in order. A competent and experienced technician allowing confident optimisation of strategic opportunities.

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Name: ANTHONY STEDMAN Company: Advice Evolution FUM: $95,000,000 Clients: 77

A: A good financial planner is one that can take a client

Chris Jones

down a sometimes complex path whilst making the process understandable and empowering the client to make decisions that are appropriate to their needs.

Obviously, been a good listener is critical to the relationship.

Q. What do you like most about being a financial planner?

Q. What has been the biggest challenge for financial planners in the last 12 months?

uncertain financial world and the everyday life goals and needs of my clients. Building relationships through regular proactive reviews with my clients. The variety of skills engaged: listening, writing, reading, numbers, economics (school was useful after all!).

conservative approach since May 2008, with significant moves to cash, fixed Interests, hybrids and higheryielding blue chips. Whilst our clients are significantly better off than they would have been had they remained invested in the markets, as business people, we are now facing an interesting dilemma. We have recently lost a client because our costs (whilst remaining very conservatively invested) have continued and he felt that there was little point in continuing paying for advice given our shared pessimistic outlook. Managing clients’ expectations whilst continuing to value our advice is a fine balance and I would imagine that most planners are dealing with this on a daily basis.

A: Bridging the gap between the cold, complex and

Q. What has been the biggest challenge for financial planners in the last 12 months?

A: Administrative and compliance ‘red tape’ that

reduces time with clients. And of course the continued market volatility and ‘flight to cash’.

Q. What has been the best thing about the last 12 months?

A: Seeing the benefits of clients taking modest risk in a diversified portfolio outperforming cash even in a negative share market period.

A: Without doubt the markets. We have taken a very

Q. What is your top tip for other financial planners?

A: Think more about the future and be proactive.

for life and people outside of work. Build FUM to over $200million, including new business of $30 million.

Handing over at least $10m of clients to other advisers in our practice. Conduct pre-retirement seminars monthly, and maintain client survey results at a high level. And give away more than 10% of what I earn!

Consider this: As clients become more educated, do your clients want to receive advice from a planner who is part of a larger banking/funds manager style dealer group, or will they value advice from a planner free of the influences and demands of a vertically integrated model?

I would suspect that the former is ‘crowded space’, with low cost advice from industry funds and the banking industry. We believe that clients who value advice (and are willing to pay for it) are not likely to be dealing with someone who is ‘tied’ to a specific set of products.

Q. What is your top tip for other financial planners?

Q. What are the biggest issues facing the financial advice industry today?

experience – to build your expertise and client empathy.

to deal with adviser behaviour and intra-fund advice.

Q. What targets do you have for the coming year?

A: Continue working 4 days per week to have more time

A: Keep an attitude of learning – from study and

A: Overregulation, largely as a result of our own inability

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Name: SHANE NICHOLAS Company: RetireCare Personal Wealth Management FUM: $75,000,000 Clients: 110

Dennis Maddern

Q: What has been the biggest challenge for financial planners in the last 12 months?

Q: What makes a good financial planner?

A: A blend of empathy, commercial savvy, an ability to

A: Continuing to deal with the economic uncertainty around the globe and the impact it has on our clients.

Q: What has been the best thing about the last 12 months?

A: Further development on industry reform. In my view the industry needs to continue on this path before we can be recognised as a ‘profession’.

Q: What is your top tip for other financial planners?

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Name: DENNIS MADDERN Company: Maddern Financial Advisors FUM: $215,000,000 Clients: 2500

Shane Nicholas

communicate clearly and precisely, and someone who places the client as the cornerstone of their business. In these times, it is additionally important that an adviser firm be totally non-aligned – i.e. not linked with or owned by a bank or insurance company. An adviser must not be conflicted as they provide advice.

Q: What do you like most about being a financial planner?

A: The challenge to work on a wide variety of different

A: Keep a healthy level of communication with your

mandates, and to assist clients gain their financial goals.

To receive a referral is an honour.

clients. We have picked up lots of new business from clients who had lost faith in their previous planner because they wouldn’t return phone calls.

Q: What has been the biggest challenge for financial planners in the last 12 months?

Q: How do you plan to adapt to the many regulatory changes that are set to affect the financial planning industry?

A: Our business model doesn’t require any adjustments following recent regulatory changes so we view this as a real positive going forward.

Q: What are the biggest issues facing the financial advice industry today?

A: In my opinion the biggest issue facing the industry today is conflicted advice models. Until the barriers between product manufacturer and advisers are broken down I don’t think we will be viewed as a profession.

A: Managing client expectation with respect to market movements, and the sometimes negative publicity around the financial advice industry.

Q: What is your top tip for other financial planners?

A: Always acting in the best interests of your client pays off in many ways, e.g. credibility, referrals.

Q: How do you plan to adapt to the many regulatory changes that are set to affect the financial planning industry?

A: Many of the FoFA initiatives we are already doing, so we are virtually 100% FoFA compliant.

Q: What are your top tips for gaining, and retaining, clients?

Q: What are the biggest issues facing the financial advice industry today?

relationships with other like-minded professionals who can assist you to grow your business, and challenge you to continually improve your service offering.

for acquisition growth by purchasing most advice businesses that came to market simply creating additional downstream channels for bank or insurance product.

These advisers are salaried despite owning their own business under the bank or insurance company’s AFSL. We see this as a unique and pernicious trend in our Industry. The adviser is conflicted and has competing demands on his/her ability to provide advice.

A: Healthy communication with clients and building

Q: What do you like doing outside of the office?

A: With two kids under the age of two, time is at a

premium. However I do love getting out on my bike on Saturday mornings followed by time with my family.

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A: Standards and qualifications. The institutions’ drive

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Name: CHARLIE VIOLA Company: Moore Stephens Sydney Wealth Management FUM: $250,000,000 Clients: 145

Q: What do you like most about being a financial planner?

A: My clients: I make a great effort to get close to the clients and genuinely understand their situation. I am acutely aware of the trust they place in me, so I do all I can to reciprocate by always being available.

Charlie Viola

Q: What has been the biggest challenge for financial planners in the last 12 months?

A: Regulatory change (and the uncertainty surrounding it) and investment markets.

Q: What has been the best thing about the last 12 months?

A: Components of the regulatory change: While change is always difficult, we understand what many of the changes are trying to achieve, and I see a positive outcome for good advisers as a result.

Q: What targets do you have for the coming year?

A: While every business has revenue targets it needs to meet (commercial reality), my main targets are always three-fold: happy clients, happy staff and happy business partners. I always treat my main KPI as referrals – as centres of influence and existing clients will only refer work to me if I am doing the right things.

Q: What is your top tip for other financial planners?

A: Call your clients back when they call, even if you don’t have an answer. They will always respect your honesty and obtain comfort from the fact that you are working on finding a solution/answer for them.

Q: How do you plan to adapt to the many regulatory changes that are set to affect the financial planning industry?

A: We have been ostensibly a fee for service business since I started working at Moore Stephens Sydney, April 2003. The change to ‘fiduciary duty’ is something we figured existed anyway. The amendment to our documents with respect to service and fee disclosures is

only a minor one, as many of the requirements were being addressed in our existing documents. As such, we believe our business is effectively ready for the changes.

Being a chartered accounting practice as well, we may also need to deal with the onset of APES230, which we think will be a greater challenge, and we don’t believe many ICAA, CPA or ACA aligned advisers are fully aware of what the standards actually mean yet.

Q: What are the biggest issues facing the financial advice industry today?

A: Perception of advisers generally. Most advisers I know are well trained, passionate and experienced professional service providers. Unfortunately we don’t hear enough from these people. Secondly, confidence in investment markets. There is a lot of doom and gloom about; advisers need to ensure their clients can get past all the ‘noise’, and focus on what they are trying to achieve, both personally and financially.

Q: What are your top tips for gaining, and retaining, clients?

A: Great client service. Referrals are the life blood of any adviser’s business. If you can gain the confidence of your key centres of influence and clients, momentum will build.

Q: What do you like doing outside of the office?

A: I have a young family, so spending time with my wife and young son is very important to me. Additionally, I am a sports fanatic, so I spend a lot of down time watching, reading and partaking in sports. I have an almost unnatural passion (my wife says unnatural) for Liverpool Football Club.

AUGUST 2012 | 23

12 20

WEALTH P R

SPECIAL REPORT

ESSIONAL OF

A D V IS

1

ER

Name: JUSTIN GILMOUR Company: Charter Financial Planning FUM: $122,000,000 Clients: 205

Q: What makes a good financial planner?

A: You must have a genuine interest in your client’s outcome. You must take the time to truly understand what is important to your client to ensure you meet their expectations. You need to actively listen to what your client is telling you and never make assumptions.

Q: What do you like most about being a financial planner?

A: Assisting clients become financially well organised and assisting them to reach their financial potential.

Every client’s circumstances are different which requires a different strategy – it keeps the role interesting.

Q: What has been the biggest challenge for financial planners in the last 12 months?

A: We operate a tactical portfolio management

service in direct equities, ETFs and direct fixed interest for clients which, with continued uncertainty with markets, has been challenging. In saying that, we have been overweight in defensive assets for some time and as a result clients have maintained positive portfolio returns.

Q: What has been the best thing about the last 12 months?

A: We have experienced significant growth in the past 12 months which goes against the trend. Profit is up 40% on the back of a very strong year last year.

Q: What targets do you have for the coming year?

A: We want to maintain our growth focus. We aim to increase our adviser numbers by two, and cement another joint venture relationship with a two to

24 | AUGUST 2012

WEALTHPROFESSIONAL.COM.AU

Assisting clients become financially well organised and assisting them to reach their financial potential. Every client’s circumstances are different – JUSTIN GILMOUR

five-partner accounting firm. We will maintain our new business upfront fee target of $1.15m for 2012/13.

Q: What is your top tip for other financial planners?

A: Develop strong referral sources. Solid referral sources should be fundamental in any growth strategy.

Q: How do you plan to adapt to the many regulatory changes that are set to affect the financial planning industry?

A: We have been operating a full fee model for the past three years. I welcome the changes – I think it will only assist our industry gain the professional standing that is lacking. The transparent fee based model is well received by clients and has contributed to our practice growth.

Q: What are the biggest issues facing the financial advice industry today?

A: The changes need a common sense approach towards reform. The industry needs to be focused on delivering quality cost effective advice. Legislation has boosted the cost of advice which means for many the cost of seeking advice and the cost to deliver that advice at time cost prohibitive.

Q: What are your top tips for gaining, and retaining, clients?

A: Develop effective referral relationships, ask your existing clients for referrals. For retaining clients be proactive – particularly in times of uncertainty, overservice them – keep them updated and pick up the phone and talk to them. Let them know you are working for them and their outcome. They will reward you for your effort.

Q: What do you like doing outside of the office?

A: Ideally I would spend every weekend down south at

our beach house in Yallingup. When I am not doing that I am taking kids to weekend sporting commitments, learning to box and spending time with the family. This year the focus is around improving my boxing technique, playing more golf and more travel. WP

AUGUST 2012 | 25

WEALTHPROFESSIONAL.COM.AU

JULY 2012 | 26

WEALTHPROFESSIONAL.COM.AU

BUSINESS STRATEGY In the turmoil of the day-to-day running of your business, much of the core strategy that goes into making your business a success can go missing. So we gathered some of the top business minds, including academics from business schools such as Harvard, Melbourne and UTS, to show you the theory behind winning in business.

Discover the key to improving and growing your business today

AUGUST 2012 | 27  

BUSINESS STRATEGY / STRATEGY AND PLANNING

GAME

PLAN Do you have a strategy for business growth? If not, you could be on a road to nowhere. KEVIN EDDY reports

28 | AUGUST 2012

WEALTHPROFESSIONAL.COM.AU

STRATEGY: Q&A Jim Sharpe, Harvard Business School Jim Sharpe, Senior Lecturer at Harvard Business School’s Entrepreneurial Management Unit, is a successful entrepreneur in his own right. He shares his thoughts on strategy with Wealth Professional.

HOW DOES SETTING STRATEGY FOR A SMALLER, ENTREPRENEURIAL BUSINESS DIFFER FROM LARGER FIRMS? Large firms have a much longer time horizon and a global outlook.

Determining their funding needs, operational investments and resource allocation is supported by their strategic planning. Small- and medium-sized businesses are more operationally focused with less complex needs.

Planning for growth with existing customers, developing product extensions, adding incremental capacity and finding more profitable opportunities keeps them busy.

IN TERMS OF TIMESCALES – HOW FAR AHEAD IS REASONABLE? HOW IMPORTANT IS IT TO HAVE AN EXIT STRATEGY IN MIND? An entrepreneur should probably be thinking no more than three years out.

Having a good idea of the plan for the upcoming year along with what might be needed the year after and some thought about the year after that. More importantly, managers need to be ‘stress testing’ this relatively short-term outlook.

Will there be a recession? What if a major customer or vendor goes out of business or a couple of key employees leave? Planning for an exit can start

Having a clear, well-articulated strategy for your business is widely acknowledged to be one of the most important things you can do in making sure your company is successful. It can be a tricky thing to get right, especially when a firm is in a relatively small state in a fast-moving industry. What timeframe should you be looking at? How do you set goals, and break them down into achievable targets? How do you stay on course – or adjust as necessary?

The first thing you need to do is make time to develop a strategy. The classic approach is to take a day or two out of the office with your business partners, key employees or outside parties such as business coaches or consultants. Others find that a couple of hours is sufficient, while some still use holidays and quiet periods in the market to do this.

1

KNOW YOUR VALUE PROPOSITION

Next, you need to have a clear idea of what makes your business different – what your overall value proposition is. Antoine Hermens, head of the Management Discipline Group and executive MBA director of University of Technology, Sydney,

when the owner is emotionally ready to leave the business; it generally takes a few years, so well within the planning horizon.

HOW DOES A BUSINESS GO ABOUT STARTING THIS PROCESS? ARE THERE ANY TOOLS PARTICULARLY USEFUL IN STRATEGY SETTING? Look first at the business model: customers served, delivering/making the product or service, getting and serving customers, and ensuring that the economics for future growth comes first. Then an assessment of the changing environment within which the business works helps set the stage for a SWOT analysis. Doing this every couple of years is a good exercise.

HOW SHOULD YOU MAKE SURE YOU STAY ON TRACK WITH A STRATEGY – AND WHEN DO YOU KNOW WHEN TO CHANGE IT? Sooner rather than later; it is always easier to wait for a little more information or another attempt at ‘fixing’. Moving to change direction decisively, based on even limited information, is one of the characteristics that make entrepreneurs successful. Generally, when a significant ‘event’ happens to the business or when some major external changes occur, are good times to reflect on ‘where we are headed’.

WHAT’S YOUR SOLID GOLD BUSINESS ADVICE FOR AN AMBITIOUS ENTREPRENEUR? Pay attention to your customer and make it easy to do business with you.

Charge enough for your product/service, then some – unprofitable businesses don’t survive.

says that too many small businesses don’t have a clear idea of what their offering is.

“The biggest challenge for small and medium-sized companies is really understanding what value you add to your customers,” says Hermens. “My research indicates that successful SMEs have really thought long and hard about their unique value proposition and the economic value they’re adding for their stakeholders: customers, employees and suppliers.”

Hermens highlights using the ‘balanced scorecard’ approach as a good way of assessing value. This is also the point at which to look at elements like your market positioning, analyse your competitors and your customer base. A wide range of tools have been developed to assist with this.

He also recommends that you look at your business and ask what’s unique about it.

“If you stopped doing business tomorrow, would anyone really miss you?” he asks. “If the answer’s no, then you’ve really got to go back to square one. You can talk about vision, mission and objectives – but if you don’t know what kind of business you want to be, what your competitive advantage is, it’s meaningless.”

AUGUST 2012 | 29

BUSINESS STRATEGY / STRATEGY AND PLANNING

TOOLS FOR THE JOB

external origins

internal origins

There are a staggering array of strategy models, frameworks, diagnostic tools and systems out there – several of which are too clever for their own good. Here’s Wealth Professional’s picks of the most useful. helpful

harmful

strengths

weaknesses

opportunities

threats

new products

market penetration

product development

existing markets

existing products

new markets

market development

diversification

SWOT DIAGRAM A well-established system first developed in the 1960s and 1970s for assessing the market position of a business and/or project. It involves analysis of Strengths, Weaknesses, Opportunities and Threats using the grid framework on the left USEFUL FOR: Determining market position; identifying weaker areas to strengthen; identifying strong areas to exploit further; competitor analysis

ANSOFF PRODUCT/MARKET MATRIX Another long-established tool, the Ansoff matrix is intended to help develop growth strategies by providing a framework for developing existing and new products and markets USEFUL FOR: Analysing current market position; diversification strategies; identifying new markets; potential expansion opportunities

financial

BALANCED SCORECARD (BSC) A tool developed in the 1990s by Robert Kaplan and David Norton, the Balanced Scorecard measures four key performance metrics – financial, customer, internal process and growth. As the name suggests, it’s intended to give a more ‘balanced’ view of performance and strategy than pure financial metrics

vision and strategy

customer

USEFUL FOR: Value proposition; strategy development and prioritisation; ongoing monitoring

high quality company A

low

relative market share high low

market growth rate

USEFUL FOR: Assessing current product/service mix; identifying growth markets; cash flow assessment

learning and growth

stars

question marks

cash cows

dogs

high

BCG MATRIX Developed in the 1970s by Boston Consulting Group, the BCG Matrix classifies products (and services) into one of four categories based on combinations of market growth and market share

internal business processes

company B company C low price

high price

company D company E company F

30 | AUGUST 2012

low quality

PERCEPTUAL MAPPING A tool that maps rival brands onto an x/y axis graph based on various attributes, usually based on customer research.

Attributes are not typically seen as positive or negative, but instead reflect the needs of different market segments USEFUL FOR: Market positioning; competitor analysis; customer targeting; launching new services

VALUE PROPOSITION The unique factors that explain why a customer should use your service or product. This is best summarised in a short statement (or several short statements).

WEALTHPROFESSIONAL.COM.AU

STRATEGY: Q&A WLM provides chartered accounting, financial planning and wealth management services that cover the financial needs of most businesses or individuals.

Services range from tax advice and compliance, strategic business and personal advice, risk management, investment advice, finance/loans, insurance, superannuation/SMSFs, retirement planning, estate planning and more.

WHAT ARE YOUR FIRM’S STRATEGIC GOALS? We have a simple approach to our business strategically: do a good job, charge a fair price, and clients will be happy and we will have a successful business. At WLM, we’ve built our business around our clients: putting their needs first and being independent and transparent in all that we do. We aim to do this in a professional, objective and personable manner. Success at our core has allowed us to build a good solid business able to withstand difficult times in the market. That is our primary goal.

From there we can get scale to develop further, thereby enhancing and broadening the service we provide clients to better meet their overall needs, developing a holistic approach and business model incorporating a number of different disciplines.

We use technology to communicate with our clients in a variety of ways and to be as efficient as possible.

HOW DOES YOUR BUSINESS MEASURE PROGRESS? Client satisfaction is a key focus, which we believe in turn leads to financial success. There are many other KPIs and yardsticks we regularly monitor to assess our strengths and weaknesses.

WHAT ARE YOUR TIPS FOR GROWING A BUSINESS IN THE FINANCIAL ADVICE SPACE? Keep it simple, be thorough, do a good job and communicate effectively with clients. Avoid grey areas, ‘glittering’ products and don’t over promise. Just keep it real and focus on meeting the client’s needs as they perceive them.

HOW DOES YOUR BUSINESS KEEP UP WITH CHANGES TO LEGISLATION? We constantly undergo professional development through external courses, attending industry events, internal training, staff discussions and presentations, reading, email and hard work.

DO YOU USE ANY EXTERNAL PARTIES TO HELP WITH YOUR BUSINESS STRATEGIES? We talk to many people in the course of our business lives and are always picking up threads and ideas wherever we go. We then develop those in-house to meet our own business and personal objectives. From time to time we bring in external consultants to help us focus on specific issues, develop ideas and help us put them in place. This allows us to gain objectivity and most of all, the time to get things done.

The general consensus is that value propositions are best kept short – distilling your core competitive advantages into a few lines or paragraphs.

2

SET YOUR OVERALL VISION

The next stage is to set your ultimate goal or vision for the business – where you want your business to be, and when.

What this means varies from person to person as does the timeframe in which you’re planning to achieve it. Some people operate on a calendar year basis; others work to five- or 10-year plans.

Fiona Mackenzie, head of Macquarie Practice Consulting, recommends a three-year horizon as a good compromise.

“We encourage our clients to step back and look at a three-year goal,” she says. “One year can be too ‘operational’: if you want to make any changes to the business it feels too tight. Five years, meanwhile, is a little far out for some people to feel that it’s practical.”

The overall goal or vision should be based on where your business is at present.

“We take a look at the business today. Key facts down on the table: key clients, revenues, profit, size and shape,” adds Mackenzie. “Then, we look at what you want it to look like in three years – once we know that, we can look at the ‘gap’ and what you need to do to achieve that.”

That overall goal shouldn’t just focus on business metrics, however: Mackenzie says you should also factor in your personal goals. While the overall vision should be relatively realistic, it can be somewhat aspirational, too – crunching it down to numbers and targets can come later. Whether you call this a vision, a big hairy audacious goal or a stretch target doesn’t matter – the key is to concentrate on where you want to be at the end of your timeframe.

Doug Mathlin of consultancy Frontrunner Group adds that it can be useful to think of this in terms of financial metrics.

“You need something you can focus on: for example, saying you want to write $100m worth of business in a year.”

3

It’s good to have quick wins, especially for small businesses – FIONA MACKENZIE

BREAKING IT DOWN

Once you’ve got your overall goal and your timeframe, you need to figure how to get there – and this is the nitty gritty of strategic planning.

You need to work backwards from your large, aspirational goal into measurable, timed targets, ideally monthly or even weekly. The tried-and-tested SMART rules for target-setting are invaluable here.

AUGUST 2012 | 31

BUSINESS STRATEGY / STRATEGY AND PLANNING

STRATEGY: Q&A Daniel Boce, Lifestyle Solutions Financial Planning Daniel Boce, financial planner and accredited mortgage consultant, inherited the advice business (an authorised representative of AMP Financial Planning) located in the heart of Kath and Kim country in the outer south-eastern Melbourne suburb of Narre Warren, from his father.

Lifestyle Solutions’ core business is to provide financial advice to small businesses and families covering issues and solutions for insurance, debt and investment.

OVERALL STRATEGIC GOALS Boce’s father originally set up shop in Narre Warren because he could see it growing into a mature market for financial advice 10 or 20 years into the future and that’s exactly what it has done.

“My overall goal is to be the first place Narre Warren families and small business owners go to for financial advice,” says Boce.

MEASURING PROGRESS? Boce uses several measures to assess progress. The first is ongoing improvement, year-on-year in revenue per client.

Sometimes the client relationship starts with specific limited advice on an issue such as a Centrelink matter or on super.

Instead of charging for a full, comprehensive statement of advice (SoA), Boce charges a smaller fee for limited advice.

He then follows up a few months later to ensure the limited advice recommendations have been implemented and often finds return business results.

That is his second measure of progress. He regularly assesses how well his business is attracting new core clients who have ongoing advice needs.

TIPS FOR GROWING A BUSINESS IN THE FINANCIAL ADVICE SPACE Boce sets high standards in terms of ongoing professional development, particularly in relation to strategies, products and legislation. “I also ensure any fee I charge is backed up by the actual effort or work I do for the client,” he says.

KEEPING UP WITH CHANGES TO LEGISLATION Boce relies on information from his licensee, attending workshops and seminars and reading industry publications.

DO YOU USE ANY EXTERNAL PARTIES TO HELP WITH YOUR BUSINESS STRATEGIES? “No. With the size of the licensee fee charged I should utilise licensee services. But business strategies provided by a licensee who is a product manufacturer can lean too much towards writing product,” says Boce.

STRATEGIC PLANNING You need to ask yourself:

• What do we do?

• For whom do we do it?

• How do we excel?

CASE STUDY: HEWISON PRIVATE WEALTH Hewison Private Wealth is an independent wealth management firm providing tailored financial strategy and investment advice. The firm specialises in recommending and managing Individually Managed Accounts (IMA) for self-managed superannuation funds (SMSFs), individuals, trusts and corporate clients. Advice is holistic including all aspects of life stages and estate planning. The firm is owned by its senior advisers and managers.

Hewison has developed its own highly sophisticated IT systems that enable efficiency and cost-effective provision of IMA services. It is a ‘high touch’ business providing clients with pro-active management of all aspects of their financial affairs.

Hewison mainly recommends direct investments in Australian listed shares, direct money market securities and direct or syndicated real estate. Some wholesale managed funds and exchange traded funds are utilised for international market exposure.

Being completely fee-for-service based, Hewison has no vested interest whatsoever in any investment or external organisation other than its clients.

The firm’s overall strategic goals are to develop long-term relationships with clients

32 | AUGUST 2012

and their families in a family office environment. A high emphasis is placed on multi-generational wealth transfer in a planning sense where appropriate. It firmly believes in uncompromised independence and sharing the ownership with those working in the business. All advisers are university educated and salary-based employees as well as being shareholders and directors. The firm’s advisers are all CFP members of the FPA, and all are accredited by SPAA as SMSF Specialist Advisers.

Hewison bases its measure of progress on many levels: new client appointments; client retention; client satisfaction – as gauged from personal interaction and an annual survey; performance measurement against individual client objectives and industry benchmarks; innovation compared to industry trends; staff retention, performance, commitment; company performance against financial budgets and profit targets.

Hewison’s tips for growing a business in financial advice are: Have an unconflicted commitment to client advice, service and outcomes; promise a lot and deliver more – client service is the only priority; surround yourself with well qualified, dedicated people;

adopt and ‘live’ the highest level of professional standards, ethics and integrity; invest in your people and nurture their growth; invest in the most sophisticated systems available. IT commerce capabilities deliver enhanced service and cost efficiencies.

Keeping up with changes in legislation, regulation and technical issues are a constant process. Hewison subscribes to a number of information sources and technical education sources and attend a number of conferences and seminars to remain updated. These are all time-consuming and expensive but nevertheless essential to ensuring that clients receive the appropriate advice.

Hewison’s directors belong to external business discussion groups and the firm has an external Chairman and mentor. A strategic planning meeting is held once or twice a year with an external facilitator to develop the firm’s strategic plan for one, five and 10 years.

The firm holds a team retreat once a year where all employees head off to an external venue for two days to workshop the business.

The firm commits to implement all decisions taken at the retreat within 90 days. The end result is that everyone has a say and has ownership of the outcomes.

WEALTHPROFESSIONAL.COM.AU

EXECUTIVE SUMMARY time to plan your strategy, and commit to  Make carrying it out

Any targets you set should include these criteria: Specific; Measurable; Attainable; Relevant; Timely.

From these targets, you can track how you’re going and extrapolate other aspects of strategy such as: • Marketing: how many campaigns do you need to mount to fulfil your targets?

• Product/service offerings: should you diversify?

• Operational issues, such as staffing: do you need administrators, more loan writers, or more offices?

• Process: can you put in place better systems to improve efficiency and therefore write more business for the same resource requirements?

a vision in mind of what you want to achieve – and  Have a timeframe down the vision into goals and targets; these  Break should be SMART (Specific, Measurable, Attainable, Relevant, Timely) your strategy up into operational areas,  Divide with goals for each. Make sure these tie back to your

FINANCIALS

core strategy

 Plot in some ‘quick wins’ to get cash coming in your financials inside outside – forecast on both  Know conservative and positive sides. Carry out cash flow projections too at your business process – can you streamline it  Look at all? can be a cost-effective solution and/or  Outsourcing give you access to specialists



! n strategy to work o

 W

It’s important to keep monitoring your progress on a regular basis.

“Set a recurring appointment with yourself called ‘Business Review’ that runs 12 times a year,” says Mathlin. “Review exactly the results achieved and adjust the plan for the next 30 days as necessary.”

You shouldn’t be hobbled by your strategy either.

“The vision should be where you want to get to: the route you get there might change. Some things you implement will not work; some will work better than you expect. There are some things you haven’t thought about that you will be able to do.” WP

?

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

MONITOR, REVIEW AND ADAPT

fice

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Understanding the financial implications of your strategy is a fundamental part of success.

Budgeting should be based on realistic sales estimates; you should also take into account every cost. It is useful to break down costs into discrete areas, such as people, supplies, facilities, equipment, marketing and other. While these numbers don’t need to be accurate, they should be a realistic estimate.

You should work several scenarios, if at all possible, with conservative and optimistic income figures so that your strategy is stress tested. It may also be worth plotting a cash flow projection showing the timing of payments and expenditure, too.

Plotting in some high-paying (or money-saving) ‘quick wins’ is also important, especially if you’re looking at investing in the business for the longer term. “It’s good to have quick wins, especially for small businesses that need to get benefit back quickly,” says Mackenzie. “Revenue is key and if they’re going to be spending time investing in the business in some way for longer-term goals – which can drain resources – you have to look at activities which are going to give them benefit in terms of cash to help invest.”

5

out analysis of your market position, competitors  Carry and areas of potential growth

T O-D O L

4

your value proposition, and be able to  Understand express it in a short statement

ASAP

e k To increas Must thin What is it? ? Sell up? ce ffi o r e th o n a n To ope et about this

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monthl  Set itor progress to mon

AUGUST 2012 | 33

BUSINESS STRATEGY / SALES AND MARKETING

MARKETING

FORCES Marketing your business effectively is probably the second most important strategic activity you can undertake after planning your overall strategy. Charles Beelaerts breaks down the challenges for your business

34 | AUGUST 2012

WEALTHPROFESSIONAL.COM.AU

KEY MARKETING ISSUES

M

arketing financial advice is not as straightforward as marketing many physical products. A number of extra hurdles must be crossed before a purchase is made.

These can be boiled down to two key issues.

First, financial and investment decisions entail a uniquely large commitment on the part of consumers compared with anything else they will buy, and the commitment is based on the trust they have in their adviser. The experience of Don O’Sullivan, an associate professor of marketing at Melbourne Business School, is that the sheer size of the purchase slows down the consumption process compared with smaller transactions.

Secondly, there can be difficulties demonstrating that you are unique in the market – whether that’s in comparison with other advisers or direct investment opportunities. O’Sullivan adds that when marketing and selling financial advice, “you need to be more believable than the competition – and competition may default to price”.

The first issue – the perceived risk of the purchase – can be dealt with in a number of ways, not least through the reassurance of a strong brand, communicating in the right way at various points in the decision-making cycle and peer recommendation.

Differentiation to other service providers, meanwhile, can be carried out through a clear marketing strategy. How can you put one in place?

STEP ONE: SELECTING MARKETS The first step in developing a marketing strategy is to identify the consumer group to whom you are making a unique offer – usually as part of your overall strategy setting.

The initial task is to evaluate the needs and characteristics of consumers and divide the market up into segments according to such things as geography, income, risk and so on. These segments should be evaluated in terms of profit and growth potential.

You may choose to focus on one segment, or service several. O’Sullivan points out that all financial planners have a choice of market and positioning and this should be an integral part of their strategy.

STEP TWO: KNOW YOUR STRENGTHS Once you know the type of customer you are targeting, you can start to shape your market

INTANGIBILITY: Services are intangible. You don’t have a physical product to sell and you don’t sell from inventory. If a physical product is defective, you can take it back and get a replacement. You can’t always do that with a service.

VARIABILITY: You can’t standardise the service offering. Each client will have unique goals and needs requiring unique solutions.

INSEPARABILITY: It is difficult when marketing a service, such as financial advice, to separate the consumer and the producer.

PROCESS: The whole service experience with financial advice impacts on the consumer in a way it doesn’t with a physical product.

RESEARCH: Services are more difficult for consumers to research than a physical product. Word of mouth is more important in this case.

COMPLEXITY: This is related to intangibility – quite often, a service such as financial advice is complex and is generally not an easy thing for people to understand.

YOUR MARKETING STRATEGY STEP BY STEP

1

IDENTIFY YOUR TARGET CUSTOMER GROUPS/MARKET SEGMENTS

2

IDENTIFY YOUR VALUE PROPOSITION(S)

3

TAILOR YOUR CUSTOMER EXPERIENCE

4 5

TAILOR YOUR COMMUNICATION CHANNELS AND MIX TO MARKET SEGMENTS

MONITOR, REVIEW AND UPDATE REGULARLY

Customer experience Customer experience is the sum of all experiences – good and bad – a customer has with a supplier of goods or services, over the duration of their relationship with that supplier. It is viewed by a number of experts as the single most important aspect in business success.

AUGUST 2012 | 35

BUSINESS STRATEGY / SALES AND MARKETING

THE SEVEN PS OF MARKETING The seven Ps of marketing is a well-established formula used to evaluate both your business strategy and marketing mix by analysing seven key customer touch points. Financial planning is a unique business area, so even general business theory needs to be tailored to specific needs. How do the Seven Ps apply to financial advice?

1

PRODUCT

Financial advice will be different every time it is received.

The service and the add-ons one gets can be different for otherwise identical products and the information a consumer gets is greatly influenced by the way in which a financial planner deals with a customer.

WHAT YOU NEED TO ASK: What are the key differences in the services offered by different advisers? How do these relate to the target market?

2

PRICE

There are many, often similar, offerings and competition can default to price where an adviser cannot differentiate themselves on other bases. Free or cheap advice is available from a growing number of sources so it is best to focus on non-price differences.

WHAT YOU NEED TO ASK: What other services do I offer other than price? Eg, specialised knowledge, innovation or high-touch service.

3

PHYSICAL DISTRIBUTION

Communicating the service is critical and you need to ensure that the distribution of information, including physical contact, is in line with consumer needs.

WHAT YOU NEED TO ASK: How can I ensure my communications are consistent and hit the right touch points at all stages of communicating with the client?

4

PROMOTION AND ADVERTISING

Online marketing has reduced the pressure on advertising. Getting messages out has become more straightforward. The importance of social media has increased enormously.

WHAT YOU NEED TO ASK: What channels are most appropriate for my target customer groups? How should these be used most effectively?

5

PEOPLE

As consumers can obtain similar deals from many different advisers, every touch point becomes important with a service that is intangible.

WHAT YOU NEED TO ASK: Are my people upholding the values we are portraying to the market?

6

PROCESS

Marketers need to be aware of every process step a consumer goes through and how to deal with it – right from when a consumer starts looking for advice until they execute your recommendations and seek reviews.

WHAT YOU NEED TO ASK: What steps are consumers taking on their journey with me? How can I ensure the process is optimised for them and espouses our value proposition?

7

PHYSICAL EVIDENCE

Financial services are intangible, but it is essential that you examine whether there is a consistency of look and feel of documentation, particularly of your own brand, at all stages of the process.

WHAT YOU NEED TO ASK: Are all my public-facing touch points – documentation, websites, office branding, uniforms, etc – consistent and in line with our value proposition? Do I have a strong brand?

36 | AUGUST 2012

positioning and communications. However, you also need to know what you’re highlighting as your key messages to various market segments.

There are a range of marketing tools available to do this, with the long-established ‘Seven Ps’ of services marketing (see box left) commonly used to analyse your marketing strategy.

Another, simpler but arguably just as effective tool that’s become popular in recent years is the concept of the ‘value proposition’: in effect, this is a short statement espousing the unique factors that explain why a customer should use your service or product. Again, these may differ for market segments, but tend to be similar.

Marketers argue that this value proposition is something that businesses should pay extra attention to; Kirrily Dear, founder of marketing and management consultancy, Eyes Wide Open, sees financial advice businesses struggling most with the area of value proposition.

STEP THREE: KNOW THE CUSTOMER’S JOURNEY Anouche Newman, associate lecturer in marketing at the University of Technology, Sydney’s Business School, agrees that customer experience is crucial – and you need to be on top of it from the word go.

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WHO WANTS A PUMCIN? My eldest son started school this year. Little did I know he wasn’t the only one being thrust into a whole new world. My husband and I found ourselves thrust into the world of school parents.

The demographer Bernard Salt would describe these parents as PUMCINS (Professional Urban Middle Class In Nice Suburbs). They are social creatures and congregate over pinot noir and goats cheese. I have noticed at these congregations they like to brag about ‘their guy’; the guy that sold their house, the guy that built their deck, the guy that delivered their baby.

But I am yet to hear someone brag about their financial planner. I have asked myself, do they have an adviser? Are they too embarrassed to discuss it? Is financial advice talk a faux pas in polite conversation?

Common sense tells me that they probably don’t have an adviser because only two out of 10 Australians do.

Why are we not attracting these PUMCINS in droves?

They can afford to pay fees. An adviser can add value to their financial life. They are pleasant to deal with. They are the ideal client. There is clearly a marketing disconnect though because PUMCINS aren’t bashing down the doors of any advice firms I know.

Attracting PUMCINS is simple. They are networkers.

They network with friends from work, from their

children’s school and from their old school. They are also a little pretentious and would prefer to brag about their private banker or private client adviser than their financial planner. They expect their doctor, accountant or real estate agent to have a personal brand that mirrors theirs.

As a profession, we haven’t succeeded in promoting the value of our advice in quantitative terms. Advisers have said to me time and again that “my clients are with me because I help them sleep well at night”. Quite frankly in a FoFA environment, that will no longer cut it. PUMCINS will only pay a fee for advice if they can see they are going to be better off financially because of it.

My advice to advisers out there who are committed to building a professional and profitable advice firm and will need PUMCINS to pay their fees: ● Integrate yourself into their world. Understand what motivates them and tell anecdotes about how you help people like them every day. ● Use their language. ● Make the experience authentic. Their brand must be everywhere: your web presence, your office fit-out, your client communications and interactions. They need to feel 100% comfortable. ● Most importantly: show them and show them often how they are better off financially because of you.

Ann Fuchs Director, Pinnacle Practice

“The days of formalised communications, ie, putting on a ‘persona’, have gone by the wayside” – KIRRILY DEAR “[The customer experience takes place] from the moment that they meet a planner through to experiencing the service and actually consuming the service itself.

“That should all be taken into account from a strategic perspective.”

Newman suggests that a worthwhile exercise when planning your marketing strategy is to ask exactly what the customer experiences from start to finish and then determine how you, as a marketer, can communicate your value proposition at all stages of the process.

O’Sullivan adds that you should also demonstrate that you are unique in the market: that comes back to researching the market and

having the right elements like promises of delivery – in effect, being able to get the customer the financial outcome they need and want.

STEP FOUR: COMMUNICATE YOUR MESSAGE Once you know: a) your value proposition; b) your target consumer group(s); and c) the customer journey, you can then work out the best ways to communicate with them at each stage.

The integration of communications into the advice marketing mix has taken on new dimensions with the ever-increasing number of ways you can contact consumers (see box page 38).

Matt Mitchener, marketing manager at Vow

Brand advocate A brand advocate is a person who talks favourably about a brand, product or service and passes on positive word-ofmouth messages about the brand to other people.

Advocates can be other businesses you have referral relationships with, public figures and/or satisfied customers.

AUGUST 2012 | 37

BUSINESS STRATEGY / SALES AND MARKETING

Communicating your message

Social validation Social validation is the act of checking decisions by consulting those around us, whether face-to-face or online. It’s seen as a powerful marketing tool.

38 | AUGUST 2012

DIRECT MAIL

SOCIAL NETWORKING

TELEPHONE MARKETING

BUILDING REFERRAL RELATIONSHIPS

ADVERTISING – PRINT AND ONLINE

SPONSORSHIP

EMAIL NEWSLETTERS

PUBLIC RELATIONS

Financial, recommends three key methods of client contact.

“First, simple eDMs (electronic direct mail) to your database – no matter who they are. It is important to get your name, brand and contact details in the inbox of your database at pertinent times during the year,” he says.

“Second, text messaging, for quick, cheap and easy communication en masse to your current clients. Why not send out a personalised SMS for a birthday?

“Finally, telephone – finding a reason to talk to a client or prospect is easy. All you have to do from there is keep the contact regular so that you remain top of mind.”

Make sure you can monitor which methods are most effective – whether that’s putting a special offer code on a print advertisement, using analytics software or a simple ‘where did you hear about us’ question into your initial client interview – because being able to assess which methods of communication are most effective is essential in refining future communications.

Dear warns that you can face an uphill struggle in a world that’s increasingly bombarded with marketing and media messages.

“There is an absolutely huge amount of market

cynicism to overcome,” she says. “Physical evidence, case studies and results, and all the measurable aspects of what you do are critical in overcoming that.”

Providing something that’s more than just a sales pitch can make the difference between gaining a client or being instantly dismissed.

“The days of formalised communications, ie, putting on a ‘persona’ have gone by the wayside,” says Dear.

“Buyers are looking for a very authentic voice within the marketplace so they feel like they are connecting and understanding the real person behind the service.

“That again helps with the feeling that they’re buying a known product.”

On a practical level, it is important to make sure that communication is consistent across every single interaction that a consumer might have with your firm, either online or face-to-face.

“For example, you might have a wonderful website with lots of information and a beautiful design,” says Newman.

“However, it sends the wrong message if the office is really shabby and the colours and branding that were used on the website are nowhere to be seen.” WP

EXECUTIVE SUMMARY and segment the market by customer type  Divide and need

Word-of-mouth power

T O-D O L

IST

Probably the most important marketing channel for financial planners doesn’t involve formal communication at all: it’s all about referrals. The power of word of mouth, referrals and testimonials is something that many planners have cottoned on to. The reason for this comes back to the ‘perceived risk’ issue about buying services, and particularly financial services. As the service can’t be evaluated before purchase – as, say, a television can be – buyers have to look for other methods to reassure themselves that they are making the right choice. A strong brand is a key way of doing this: ‘social validation’, seeking the views of trusted others, is another. Research also bears this out: according to a McKinsey Quarterly report, word of mouth is the primary factor for between 20% and 50% of all purchasing decisions.

One way of doing this is by building relationships with other professionals – brokers, accountants, solicitors and so on – who will refer business, usually for a small fee.

The second, more prized referral method is recommendations from previous customers, who effectively act as ‘advocates’ for a business in a social situation.

However, the best way to recruit a ‘brand advocate’ is to simply provide a superlative customer experience: if you do that, they’ll want to tell their friends about you.

While face-to-face recommendations are still the most common form of referrals – the classic ‘chat over the barbecue’ – social media is also opening this up to a much wider audience. Think consumers using customer reviews (eg, on Amazon or iTunes) prior to purchase, or by asking for peer views via social networks.

Admittedly, managing the new world of two-way online conversation can be a bugbear to many marketers previously used to ‘one-way’ communication.

Don O’Sullivan, an associate professor of marketing at Melbourne Business School, says that there is a degree of maturity coming into this aspect of marketing communications: it is increasingly being looked at as a cost of doing business.

It’s a growing channel, too. According to Kirrily Dear, founder of marketing and management consultancy, Eyes Wide Open, the amount of social validation being carried out online is significant.

“Selling any type of service online, and financial advice in particular, isn’t necessarily happening on the corporate website anymore,” she argues. “It’s happening within social networks. Any firm serious about their marketing needs to work that out.”

All this online and offline social validation adds up to one thing: your reputation is crucial.

How do you manage that reputation? Know your value proposition; know your target market; ensure your marketing messages and brand are targeted and consistent; and recruit ‘brand advocates’ through providing value and, above all, superlative customer service.

Financial advice is also all about trust – a client who is helped by their adviser in their time of need is likely to tell several others about how they were there for them.

 Position yourself by offering a unique service  Know your value proposition the courage to set yourself apart from  Have the competition  Never over-promise  Research your competitors and your consumers  Emphasise quality of service  Be consistent with your communications  Develop a knowledge and awareness of social media  Don’t sell to consumers, help them to buy  Be adaptive to the rapidly changing environment beyond the ‘Seven Ps’ of marketing to customer  Look experience, and focus on giving consumers the best outcome

 Build trust in your dealings: reputation is a key element

arket

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AUGUST 2012 | 39

BUSINESS STRATEGY / LEADERSHIP AND MANAGEMENT

WHAT MAKES US

TICK? Understanding yourself and your employees better can take your team to the next level.

JILL FRASER reports

“A good leader possesses two key attributes, the ability to set direction and the skill to drive people towards that direction, motivate and align them and ensure that the direction appeals to their hearts as well as their heads.”

Their hearts?

Twenty years ago, an article on leadership would have reflected the domination of boardrooms by alpha males who believed that emotions and feelings in an office environment were about as relevant as children’s storybooks and as welcome as T-shirts, and probably kicked off with something like: “A good leader recognises that business strategy is a highly rational process of eliminating variables and maximising opportunities”.

Leadership in 2012 is a much more holistic concept: leadership training institutions, such as Deloitte’s Leadership Academy, use the analogy of children’s stories to encourage business leaders to tap into their own stories in order to become more open, honest, transparent and real.

Today, as expressed in the opening quote by De40 | AUGUST 2012

WEALTHPROFESSIONAL.COM.AU

TECHNOLOGY: PROS AND CONS loitte’s Leadership Academy chief and founder, Tom Richardson, good leadership engages the heart as well as the intellect, and encompasses a number of key qualities.

Richardson established the Deloitte Leadership Academy to expand the capabilities of leaders after recognising that ‘people, not PowerPoint’ drove organisational performance. He has years of experience in the leadership stratosphere – working intimately with 15,000 of Australia’s top business leaders – and so is uniquely placed to explain why leadership is ‘a people game’.

“The characteristics and capabilities of good leadership are universal across almost all industries,” he says. “But it’s become more and more important in the finance industry because of the pressure around bonuses and remuneration.

“People will only stay in an organisation if they feel connected and engaged. They’re not being paid to stay there with bonuses anymore. The need for leaders in the financial services industry to build up their people skills has become increasingly important.”

Andrew Henderson, CEO of Leadership Management Australasia, introduces the term “leadership charisma”.

“It’s to do with connection – a connection that makes me feel that my leader is charismatic and the only way that connection will be established is if

my leader has the emotional intelligence to understand me – what motivates me, why I’m here, how I react.

“Unless leaders understand and invest in their people, they will not be able to influence them because when they want to rally their team to do something, the reaction will be ‘you only want us to do this because of what you will gain’,” he adds.

“But, if each individual knows from experience that their boss is invested in them, listens to them (consultative leadership) and honestly cares about them, they will trust the leader’s decision on behalf of the team. That’s leadership charisma,” Henderson maintains.

NEUROSCIENCE IN ACTION A high trust factor is paramount in the leader/employee equation in the finance industry, says Professor John Toohey from the Business Psychology Discipline, Graduate School of Business and Law RMIT University, because of the nature of the business and the fact that a culture initiated and practised at the top is mirrored down the line and will eventually shape customer relations.

Toohey familiarises his graduate MBA students with neuroscience to add weight and credibility to the argument that the most effective, charismatic leaders function from their emotions.

“Through neuroscience, we have come to realise

Leadership: key qualities

EMPATHY COMMUNICATION PROCESS & TACTICAL ORIENTATIONS LOGIC

EYE FOR DETAIL

INSPIRATION

EMOTIONAL INTELLIGENCE & SELF-AWARENESS

‘BIG PICTURE’ VISION

Leading in the future One challenge leaders have to adapt to is technology. Tom Richardson, managing partner, Deloitte Leadership Academy, says there are benefits and challenges.

“How do leaders engage with their people when they’re scattered around the world? Technology!” he says. “Technology is a powerful vehicle to carry messages and establish connection – intranet, email, videos, TV channels, webinars, live feeds. The trap is a leader not understanding the purpose of each technology medium.”

BENEFITS ✔ Technology is powerful for listening and asking questions.

Technology can prioritise. It also enables communication between people to build up a sense of community in an environment where geography and sheer volume prevent you from meeting. ✔ More and more leaders’ messages are delivered via video or voicemail – you can hold emotion in voicemail. Email is not so engaging.

CHALLENGES The many options ✘ create complexity.

Whenever you have a message it’s essential to balance technology with the personal touch. ✘ Don’t rely on technology too much.

Physical face time is often key to effective communication.

Source: Deloitte Leadership Academy

AUTHENTICITY

Source: Deloitte Leadership Academy

AUGUST 2012 | 41

BUSINESS STRATEGY / LEADERSHIP AND MANAGEMENT

EXECUTIVE SUMMARY isn’t just about marshalling the intellectual resources of  Leadership your workforce: it’s about engaging their emotions too. of good leaders include empathy, logic, ability to inspire,  Qualities authenticity, an eye for detail and a ‘big picture’ vision, process and tactical orientations and emotional intelligence. a connection with your employees and stakeholders and  Making understanding them is key to being able to rally a team. shows that harnessing emotions can be much  Neuroscience stronger than the rational side of the brain, as this kicks in earlier and creates stronger neural pathways. yourself is key to being able to motivate others – and  Knowing emotional intelligence is key to self-awareness.

that decision making is primarily emotion-based,” explains Toohey.

“The emotional parts of our brain kick in long before the rational parts. The rational parts follow and try to make sense and contextualise.”

“A lot of men in business are afraid of that component, and don’t want to know about it. The executive education I’ve done in this area is fascinating: people have quite bemused smiles when I first tell them this but as they dig into it and I show them the research, they begin to look more bewildered than amused.”

Toohey contends that an area of critical importance in business education is the nature of beliefs and biases. He teaches that the brain is highly plastic/durable. Beliefs belong to the irrational/ emotional world, and a strongly-held belief can change the neural pathways of the brain (thus the plasticity).

“Leaders usually don’t understand this and therefore don’t get the impact,” he says.

The significance of all this, he says, is to highlight the relevance of self-awareness (what we believe, why and how we behave, and why) in what he refers to as “the psychology of strategy” for leaders to “inspire people to act in predictable ways”.

“I challenge managers and executive MBA students because usually they are very good at identifying biases in others, and very poor at identifying them in themselves,” adds Toohey. “I tell them, ‘if you don’t understand yourself go and grow cabbages or do some other solo job’.

“Don’t pretend that you can go into a business and take a leadership role because you’ll only make a mess of it. If you don’t understand yourself you’re 42 | AUGUST 2012

never going to understand others, you’re never going to be able to motivate them.”

LEADER, KNOW THYSELF Jason White and Juliet Bourke, human capital partners at Deloitte, agree that self-awareness is a crucial element of leadership training.

Post-GFC, due to external market forces and related circumstances that prompted change, leaders with higher ‘emotional intelligence’ (self-awareness being a critical component of emotional intelligence) have emerged at the forefront, reveal White and Bourke.

Successful leaders during the GFC ensured that communication with staff was increased 10-fold, often spending at least 30% of their time with their teams, says White.

“Whenever we experience a crisis, it’s an opportunity to reflect and minimise certain notes and amplify others, one of which has been becoming more inclusive,” adds Bourke.

COMMUNICATION Lee Iacocca, former CEO, Chrysler Corporation, once said, “You can have brilliant ideas, but if you can’t get them across, your ideas won’t get you anywhere.” Nido Qubein – businessman, motivational speaker, President of High Point University in North Carolina since 2005 and master of communication skills – says that the most common mistake made by leaders is “confusing the art of communication with the science of connecting”.

“Effective communication is not merely the transference of knowledge, data or information.

The heart and soul of effective communication relates to the ability to build a bridge of understanding. That means to connect with them,” he says.

“Something amazing happens when someone believes that the person communicating with them knows his or her fears, goals, aspirations and needs.”

Qubein adds that when leaders really connect, they use language that their people relate to, speak from their perspective and address issues they find important. The moment they do that the value of what they’re saying is heard in a modality in which people can relate and recognise the benefit to them.

“When this happens both the art and the science have been employed and communication has, as we say, clicked.”

“We all know the ability to drive performance, be financially astute and commercial and deal with operating issues,” says Richardson. “Possessing the

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emotional intellect to understand where your workforce’s mindset is at, what’s driving their motivation and be a real person with them and build engagement has been proven to be crucial in retaining top talent.”

Bourke says that it’s about understanding individuals, as opposed to seeing them through your own lens.

“The ASX’s focus on diversity skills is causing leaders to sit back and question whether they are actually seeing the person in front of them, or simply making assumptions based on stereotypes,” she says.

“Seeing the person accurately is about seeing their strengths, how they sit with other team members, their career orientation, and creating an environment in which you can pull together the best of everyone in order to create a high-performing group in which everyone can excel.” WP

In theory: emotional intelligence The rules of the heart Professor Neal Ashkanasy from the University of Queensland is a world leader in the field of emotional intelligence (EI).

He defines the concept as having: • the ability to perceive emotions in yourself and others • the ability to use this information in decisionmaking • understanding of emotions and their consequences • the ability to manage emotions in yourself and in others.

According to research conducted by EI expert Daniel Goleman, another of the world’s leading proponents of emotional intelligence, “the higher up the organisation you go, the more important emotional intelligence becomes”.

Goleman’s research suggests that EI is twice as important as IQ and technical skills. He classifies EI as a framework of five elements:

• HIGH SELF-AWARENESS – They understand their emotions, and because of this, they don’t let their feelings rule them. They’re also willing to take an honest look at themselves.

• SELF-REGULATION – The ability to control one’s emotions and impulses.

People who self-regulate typically don’t allow themselves to become too angry or jealous, and they don’t make impulsive, careless decisions.

• MOTIVATION – They’re willing to defer immediate results for long-term success.

• EMPATHY – Goleman says perhaps the second-most important element of EI is the ability to identify with and understand the wants, needs, and viewpoints of those around you.

• SOCIAL SKILLS – It’s usually easy to talk to and like people who have good social skills. Those with strong social skills are typically team players.

CAN YOU IMPROVE YOUR EMOTIONAL INTELLIGENCE? Researchers disagree over whether you can build your ‘innate’ level of EI. However, it’s generally acknowledged that you can train to be better at EI. Corporate psychology firm Mindtools suggests carrying out the following exercises: • OBSERVE HOW YOU REACT TO PEOPLE. Do you rush to judgment before you know all of the facts? Do you stereotype? Look honestly at how you think and interact with other people.

• LOOK AT YOUR WORK ENVIRONMENT. Do you seek attention for your accomplishments? Humility can be a wonderful quality, and it doesn’t mean that you’re shy or lack selfconfidence. When you practise humility, you say that you know what you did, and you can be quietly confident about it. Give others a chance to shine.

• DO A SELF-EVALUATION. What are your weaknesses? Are you willing to accept that you’re

not perfect and that you could work on some areas to make yourself a better person?

• EXAMINE HOW YOU REACT TO STRESSFUL SITUATIONS. Do you become upset every time there is a delay or something doesn’t happen the way you want? Do you blame others or become angry at them, even when it’s not their fault? Stay calm and in control in difficult situations.

• TAKE RESPONSIBILITY FOR YOUR ACTIONS. If you hurt someone’s feelings, apologise directly – don’t ignore what you did or avoid the person.

People are usually more willing to forgive and forget if you make an honest attempt to make things right.

• EXAMINE HOW YOUR ACTIONS WILL AFFECT OTHERS – BEFORE YOU TAKE THOSE ACTIONS. If your decision will impact others, put yourself in their place. How will they feel if you do this? Would you want that experience to happen to you? If you must take the action, how can you help others deal with the effects?

AUGUST 2012 | 43

STATS PROFESSIONAL

WEALTH

58

%

FOS says that more than half (58%) of the investment disputes it handles are about products or services provided by financial advisers or planners.

Source: Compensation arrangements for consumers of financial services Report by Richard St. John, April 2012

Average fees per SMSF dropped from 0.95% in 2008 to 0.67% in 2009, and then to 0.65% in 2010.

ATO Self-managed Super Fund Statistical

4.5

%

The average Australian shares fund manager suffered a 4.5% loss during the May quarter.

Source: Mercer survey of the top Australian Equity Funds (to May 2012)

3.37m

The number of high net worth individuals HNWIs (investable assets of US$1m or more) in the Asia-Pacific expanded 1.6% to reach $3.37m last year.

The total number of HNWIs in Australia dropped from 192,900 to 179,500 last year – representing a decline of 6.9%.

Source: RBC Wealth Management World Wealth report 2012

$$$$$$$ Fee-consciousness is on the rise in the Asia-Pacific region, with 68% of respondents saying fees were making it hard to justify initiating or increasing alternatives exposures (compared to 47% globally). This is primarily due to the upcoming introduction of MySuper regulations in mid-2013 and the requirement to offer a “low-cost, no-frills” investment option, says Russell Investments.

Source: Russell Investments 2012 Global Survey on Alternative Investing

44 | AUGUST 2012

WEALTHPROFESSIONAL.COM.AU

Perception of trust and reliability and perception of technical ability of financial planners have increased 4.3% and 5.9% respectively since October 2011.

Source: Lifeplan ICFS Financial Advice Satisfaction Index

SMSF membership has nearly doubled over the past eight years to nearly 900,000, up from just over 500,000 in 2004.

Source: SPAA

1

$ .38trn Australia’s superannuation funds now hold $1.38trn in assets.

Total estimated assets – which include the assets of self-managed superannuation funds (SMSFs) and the balance of life office statutory funds – rose by $47.4bn (3.6%) to $1.38trn over the 12 months to 31

March 2012, taking into account an increase of $73.2bn (5.6%) in total assets over the March quarter. ❒ Industry funds saw their estimated total assets rise by 7.3% over the March quarter (rising by $17.9bn to hit $264.5bn). ❒ The figure for corporate funds rose by 6.4% ($3.4bn) to hit $57bn. ❒ Public sector funds saw their estimated total assets increase by 6.3% ($12.9bn) to reach to $218.1bn. ❒ The APRA estimate for retail funds increased by 5.2% ($18.8bn) to reach $376.9bn. ❒ During the March quarter, industry funds received 32.6% ($6.6bn) of total contributions; public sector funds 32.1% ($6.5bn); retail funds 31.1% ($6.3bn); and corporate funds 4.3% ($872m). ❒ The combined rate of return for the March quarter was 5.4%. The rate of return for corporate funds was 5.5%, industry funds 5.4%, retail

Consumer Credit Expectations Survey

62% 59% 18% 69% 25% ● 62% 50- to 64-year-olds are worried about their personal financial health.

● 59% of consumers are concerned about their current financial situation, 21% of which are very concerned about personal finances.

● 18% of consumers have no savings, while a further 31% would survive on savings for no longer than a month following loss of full-time employment.

● 69% of low-income households are concerned about their financial situation.

● 25% of low-income households have no savings, a further 34% would survive no longer than a month following termination of full-time employment.

Source: Dun & Bradstreet’s Consumer Credit Expectations Survey

funds 5.3% and public sector funds 5.3%.

Source: APRA March 2012 Quarterly Superannuation Performance

SMSFs

31%

● Thirty-one per cent of SMSFs

have a balance of $1m-plus. These large funds control 69% of all SMSF assets. ● Among SMSFs who currently use an RG146 compliant adviser, only 25% say they make investment decisions with their financial adviser. ● Of the 178,000 SMSFs who made a substantial change in asset allocation, 111,000 said a reason was to be more defensive (78%), versus 28% to be more aggressive and 15% to do both. ● SMSFs now hold $133bn in cash.

Excess cash now stands at $50bn.

Less control over investments (61%), management fees (61%) and entry/exit fees (54%) were the most cited barriers to managed funds use. ● Seventy-five per cent (up from 68% in 2011) of SMSF investors said they would consider purchasing a financial product online.

Source: Vanguard/Investment Trends April 2012 Self Managed Super Fund: Investor Report

AUGUST 2012 | 45

PLANNER PROFILE / LEANNE MCDONALD

WHY FEMALE PLANNERS CAN

SUCCEED

The highest placed female in Wealth Professional’s prestigious Top 50 Advisers awards, AMP’s Leanne McDonald explains why women make great financial planners, and how more women might be attracted into the industry Wealth Professional: You were placed 12th on our list of Top 50 advisors in Australia, what do you put that achievement down to?

Leanne McDonald: Most of my new clients are referrals from existing ones. I find women are my biggest referrers. I’m always looking for opportunities to promote the value of advice to both men and women. I am passionate about helping people find solutions and plan for the future.

You were also the highest placed woman.

With only a few women making the whole list, why is financial planning such a maledominated profession?

LM: Although the number of female financial planners in the industry is on the rise, it’s understandable that some do still feel intimidated as women are underrepresented on the whole in the industry.

Women need more understanding and knowledge about this profession, especially that there is potential to achieve a good family and work balance.

What would be your advice for women looking to break into financial planning? Why is it a great job?

46 | AUGUST 2012

LM: You need to have a general interest in finance and helping people. You need to be driven and positive about what you can achieve for clients. It is a very rewarding profession. My job satisfaction is a definite 10! Financial planning can offer women a career with great work/life balance, offering flexibility, the ability to be your own boss, and the potential for substantial financial reward as well.

How would the financial planning industry benefit from having higher numbers of female planners?

LM: I believe women can connect, communicate and engage with clients through understanding and empathy. Many clients are now seeking female planners, as can happen with GPs. It’s a profession that requires the relationship building and trust and the industry would grow and benefit from more female planners.

What else needs to change to ensure a higher balance of women on the list and in the industry? Does it need to be regulatory change, or more cultural?

LM: More female financial planning role models are

WEALTHPROFESSIONAL.COM.AU

“Women can connect, communicate and engage with clients through understanding and empathy. Many clients are now seeking female planners, as can happen with GPs” – LEANNE MCDONALD

required, including younger entrants to encourage more females into the industry.

There also needs to be more recognition of women in financial advice roles. The AFA Female Excellence Awards, only established in 2011, is a great start. We also need more women’s financial planning peer groups, so that female financial planners can learn and be inspired by each other to go further in their career.

Does AMP do anything different to ensure a more blended mix of financial planners? What is it like as a work place?

LM: AMP is actively seeking to attract more female

financial planners to the profession, offering a range of programs to support women, including through the AMP Horizons academy. I think the organisation could improve in the area of ongoing support and networking groups for women.

Speaking more generally, what has been the biggest challenge for financial planners in the last 12 months?

LM: Constant regulatory change and managing the client perceptions around this.

What has been the best thing about the last 12 months?

LM: I’ve really enjoyed working with my clients to help them work towards achieving a better future, which means something different for everyone.

Growing my client base also means I’ve been able to reach even more Australians and begin a new financial planning journey with them.

The other best thing about the last 12 months has been Queensland winning the State of Origin!

What targets do you have for the coming year?

LM: My main target over the coming year is to continue to build relationships with my existing and new clients and work towards achieving their financial goals, both short-term and long-term.

What are the three main things you like to do out of the office?

LM: I have three children, all of whom keep me on my toes! I enjoy entertaining with family and friends, and to relieve the stress I enjoy running, dancing, reading and music. WP

McDonald’s top tips for gaining and retaining clients ● Obviously, give good advice to all of your clients ● It is essential that you provide an exceptional personalised client service ● It’s also a good idea to survey clients regularly to ensure you’re meeting their expectations and provide client referral reward programs

AUGUST 2012 | 47

LIFESTYLE / A DAY IN THE LIFE OF

A day in the life of… Greg Cook Greg Cook is managing director of Eureka Financial Group 8am Prospective client meeting.

This time of day is great for busy people. Our process is to make the appointment at least 10 days out and forward our pre-appointment pack (our illustrated Financial Services Guide, and our Financial Needs Analysis form) in the mail.

The client gets our SMS the afternoon prior, so they normally arrive on time and prepared for the agenda.

5.00am I usually wake up early.

I’m a bit of a news junkie – I’ll often be listening to what’s happened overnight on the BBC news feed.

First thing I’m guilty of picking up the iPhone and checking emails, Facebook and news sites.

7.15am I like to miss the worst of the traffic, plus it’s great to get work done before everyone arrives and the phone starts ringing. I open up the doors onto our harbourside balcony – although there are a million people commuting close by, it’s really quite peaceful. Replying and sorting through emails and documents tends to dominate early morning. The morning hours are precious, and a great time to get through some demanding projects.

All the same though, I like to spend the first half hour or so warming up with some more straight forward matters. Proofing and signing off on a couple of Statements of Advice sent from my paraplanner overnight. I still like to print when proofing important documents.

48 | AUGUST 2012

9.00am With a team of 12 there is usually some juggling with resources and last minute availability. We have quite a few people working part time and also hot desk a bit. I start preparing for my main client meeting. It’s the recommendation step and I like to be across all the issues, as well as checking through the implementation papers.

10.30am Recommendations client meeting. Financial health is the next most important thing after medical health, so presenting the analysis and strategy for a client’s future is an important time.

12.00pm Another email catch up. I know others may prefer to be less available, but I try and be fairly responsive to emails throughout the day. With clients a succinct email can be better than a day’s phone tagging. If a proper discussion is needed, we schedule a time for a meeting or teleconference.

1.00pm Lunch today at Eureka is a

barbecue out on our balcony. Luna Park adds some atmosphere. Kids screaming upside down on the rides – it’s a lively atmosphere.

1.30pm A scheduled phone conference with a health publication. I discuss a list of financial tips for those diagnosed with cancer. We’ve engaged a PR company and through them we’ve been doing a lot of consumer media in the last year.

2.30pm Signing off on financial plans, working with my PA appointment scheduling.

4.00pm Sit down with my disability claims coordinator to discuss two client income protection claims. A few other management matters – finance (my business partner does the heavy lifting here), and operations/ people/marketing along with my practice manager.

4.45pm Final preparation and a cab into town for a five-minute presentation I’m doing tonight at an FPA Sydney Chapter function – “My five Tips for Success”. It’s something a little different – 10 speakers, with 20 slides each, at a 15-second spacing.

9.30pm Time to relax and head to bed. At the moment I am enjoying reading Double Entry by Jane Gleeson White, how the merchants of Venice contributed to modern accounting. WP

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