Well-known Western Australian adviser, Mark Rando, shares his views on the steps he is taking to continue to build a successful risk-focused advice practice in the lead up to the implementation of the Life Insurance Framework reforms…
The proposed changes to the Corporations Act are once again before Parliament and it’s a bill that has weighed heavily on the adviser community, in terms of the strength of debate – the impact this has had on long-standing relationships and the uncertainty it has created for practices.
In putting pen to paper for this addition of Riskinfo I considered the changes we had made in our practice (Rando and Associates) in the last few years and those changes that are on the horizon, in the hope that sharing this might assist other advisers who are looking to adapt in the face of a changing industry.
Get clear with clients and with yourself
Over the next few months we will be working on revamping our Value Proposition. Certainly it’s something that you should be reviewing yearly, but in the face of the changes ahead it is even more pressing.
By way of an example, it became very clear to us early on (when the proposed changes were first floated) that short term business was no longer an option for Rando and Associates and, if it turned out that was what a potential client was seeking, we needed a plan to deal with that.
We needed to be very clear on two fronts. We needed clarity internally about the clients we wanted to attract and to be clear with clients who fell outside of that remit on how and why we deliver our services the way we do. There is always a place for someone at Rando and Associates, but by being clear about what we offer, we can assist potential clients to see whether our service offers the most value for their circumstances.
Additionally, once you get that cohort of ideal clients, look after them!
To do this effectively you need to segment your client base, know who’s bringing in the most income and have a ‘client touch’ program mapped out for the year based on that. Observe clear turnaround times once a client makes contact, send monthly email updates and arrange outings for your top clients (centred around an activity) dotted throughout the year.
Look after who you have and you shouldn’t need to spend so much of your time hunting for new business.
develop a strong advice model and stick to it
Costing and pricing
I’ll preface my next statement by saying first and foremost, develop a strong advice model and stick to it.
About five years ago I undertook a costing and pricing analysis of every aspect of Rando and Associates business activity, right down to the last phone call.
Once I knew the cost of our advice model, the next step was determining how to recoup those costs, while at the same time offering exceptional value to the client. This is why sticking to your model is so important – if you’re going to develop or shift to offering other services, they need to be priced accordingly.
In terms of providing value as advisers in this changing space, we need to move away from selling products and move towards providing advice. Absolutely we’re there to prevent our clients’ financial distress with life insurance products but we need to do more than that. We need to understand and be there for the whole of a client’s needs.
Know your worth
This point goes hand in hand with costing and pricing your services.
Know it and don’t be afraid to say what you are worth. And while I’m not talking about walking around waxing about your hourly rate, don’t be afraid to back yourself, to know you’re of value and to communicate it in everything you do.
You’re running a business and there are costs and expenses that go with that. Furthermore, those costs and the value of your time exist because of the years of experience you possess. Like Picasso’s famous quote to the woman who was staggered by the price of his brief sketch of her:
‘How could you want so much money for this picture? It only took you a second to draw it!’
‘Madame, it took me my entire life.’
As adviser businesses we must become more ‘business like’ and not apologise for that.
Broadening the income base
The South West of WA is an area that is flooded with financial advice services. Longevity is a key part of any businesses success and staking your claim and protecting that claim is something I know intimately.
Longevity, whether you’ll be around in one, two or even fifty years, is all about resilience.
Whether the result of economic downturn or simply seasonal, your practice will peak and trough. Possessing a broad income base and making the most of every resource is critical in keeping an even keel when it’s not all ‘boom’.
Once someone gains qualifications the on-costs start to stack up (insurances etc.) and you need to get as much out of everyone as possible. Hiring staff with the necessary qualifications or supporting them to get them means that you are able to provide advice in additional areas and draw in more business.
You may also, on closer inspection, find that there are additional services that you can offer that are relatively cost neutral for your practice. This year Rando and Associates has developed its Claims Service (a service which was already on offer to segments of existing clients) and is now offering it on a fee for service basis to all clients and the broader community.
Do it yourself or find someone who can
There are a number of complementary services that clients of your practice will need over time and if you can’t offer these yourself, if you don’t have that infrastructure, you need to get out there and be forming partnerships so that you can.
Sometimes, simple referral pathways are not enough. Recently, I was getting tired of referring clients for legal advice but finding myself unhappy with the feedback I’d get from clients about the service they received. It was reflecting badly on me.
Previously, we have not advertised Estate Planning as a service of Rando and Associates. However, we have recently partnered with The Legal Hub so we have the capacity to engage a qualified Estate Planner on behalf of our client.
I now know that clients are not only getting the advice they need but I can be confident about the quality of the service they receive. In essence, I am getting everything I need for my clients, without the expense of another full time staff member while we are still growing this service offering.
we have little choice but to adapt or wither in the face of changes
The next 12 months
There is no doubt that getting ready for the ‘claw back’ provisions in the Life Insurance Framework reforms will be one of the biggest challenges for the next 12 months. This challenge doesn’t just apply to our internal processes for dealing with it, but also in how we explain this and the additional costs to existing and future customers.
I’ll also be working on the additional services we intend to offer and refining our Value Proposition and costing and pricing these services accordingly.
Like every adviser there are parts of the proposed changes that I’m not 100% happy with. But ultimately, the Bill is showing every sign of being passed in its current form or with minimal changes. As advisers we have little choice but to adapt or wither in the face of changes that will possibly have far reaching consequences.
Mark Rando is the Senior Adviser and Managing Director of Rando and Associates based in Bunbury WA. He is a finalist of the AFA Adviser of the Year 2011, 2012 and 2013, a finalist in the 2016 Telstra Business Awards and State Chair of the MDRT. Mark currently mentors other advisers in Australia and overseas.