Most Kiwi brokers are in the middle of reassessing their business, and, according to experts, this may mean a “commercialisation” of firms which had been set up as lifestyle businesses.
Many financial services professionals enter solo broking to free up time and flexibility in their schedule, to be their own boss and sustain a good work-life balance. However, the COVID-19 pandemic has meant a huge reassessment of priorities for all businesses, and advisers have not been exempt.
Business expert and former adviser Tony Vidler says that over the past month, advisers have had to “commercialise” their offering, and have been forced to reassess how they position themselves in the market. He says specialist advice businesses have had a particularly rough time of it, and, as we move forward, a “jack of all trades” approach will serve many brokerages better than a niche specialism.
“One of the biggest themes that I’ve seen is the commercialisation of adviser businesses,” Vidler explained.
“In the past they’ve been run as a lifestyle business, and they’re now having to learn how to manage their staff better, how to use technology, how to redefine their value proposition, engage with clients in different ways, etc.”
“There is also quite a significant strategic reassessment happening,” he continued.
“It’s been an odd time, but the other big thing that comes out is a lean towards a real broadening of their service offering. The specialist advice firms have suffered the most over the last month - those who only do mortgage broking, or only do investment advice, etc. The more holistic businesses have had an easier time of it, and most of the specialists I see are now considering how to broaden their service offering.”
When it comes to planning ahead, Vidler says advisers now have a “golden opportunity” to take the regulatory changes they’ve been working on over the past months and give them a test run before the new, delayed regime kicks into gear. He says this will be a vital part of positioning their offering in the “new normal”, especially once legislative change is picked back up.
“That’s a really critical part of getting your positioning right in the new regulated world,” he explained.
“It’s not just a matter of having a great process which stands up to audit scrutiny, you have to have the right people doing the right things inside your business.”
“We’ve got a timeframe now where you’re not going to have regulators bashing you up along the way,” he added. “If you’re ready to run as a FAP by July, you have a solid 6-8 months to ensure you have the right behaviours and systems actually working before the regime goes live.”
On the insurer side, Partners Life chief commercial officer Tony Arthur says that in this new world, quick and accurate information is king. He says advisers will need to work more closely with insurers to keep their clients informed, and although the process so far has been “imperfect”, there are a lot of learnings to glean from how things have been done over the past month.
“When you’re responding to a crisis and you have a certain amount of unknowns in a time of real flux, we as an industry have responded as best as we can,” Arthur said.
“But I think there will be a lot of learnings around the importance of being able to provide accurate and timely information to advisers so that they can be clear, and provide that information to clients.”
“It’s always going to be an imperfect process,” he explained.
“I’ve also seen a real variation in businesses’ ability and readiness to cope with rapid disruption. Whether you have a formal BCP in place or not, there is much around the coming regulations that we’ll need to adapt our businesses to. I’m sitting in my kitchen and talking to my laptop, and it’s been full and frantic over the last few weeks - we’re all using technology in ways we’d never have imagined, and we need to think about how we’ll continue to care for clients, grow businesses and leverage technology.”
Ultimately, Arthur says that nobody could have foreseen how the COVID-19 situation was going to play out - however, the key now is to accept the current volatility and understand how we can work within it.
“Nobody could have understood or envisaged the way that COVID and the subsequent restrictions have flowed out,” he stated.
“But we need to recognise that we’re still in a period of a lot of unknowns, and, looking at level three, we need to think about what that means for how consumers and clients want to interact with us.”
