Those are among the headline findings of the tenth Investment Trends Planner Business Model Report, which contained several positive messages for the financial planning sector.
A return in investor confidence over the past 12 months led to a significant 22 per cent increase in new client inflows after the sluggish period between 2009 and 2012, from $4.1 million in new client flows in the previous survey to $5 million in 2013, Investment Trends senior analyst Recep Peker told InvestorDaily.
“This has helped boost planners’ confidence, their outlook and their business profitability,” he said.
The average number of active clients had dropped by 20 per cent in that period, from 175 per adviser in 2009 to 141 in 2012, but levelled out in the 2013 study at 142.
The online survey of 1,141 financial planners, concluded in May 2013, also found dealer group advocacy was at a four-year high, with planners now more likely to recommend their licensee to other planners.
“Planners are generally happier with their dealer groups, but these results vary markedly between different dealer groups,” said Mr Peker.
“There are clear drivers of success here, and what we find is that it comes down to planners’ views on the level of support, flexibility and proactivity provided.”
The group that scored the highest was BT-aligned Securitor, with a net promoter score of +49 per cent.
Planners cited the group’s excellent support and compliance services, and said Securitor was pro-active in tackling Future of Financial Advice (FOFA)-related issues and keeping them informed.
Securitor and Licensee Select managing director Matt Englund told InvestorDaily the group’s education program, a clear articulation of the value the group delivers and strong support around FOFA had been key to the result.
Commenting on the broader survey findings around the number of engaged clients and new client inflows, Mr Englund said that over the past few years advisers generally have been starting to carefully consider which clients they work with.
“[When] you start to get really clear about the type of clients you want to serve… amazingly you uncover opportunities you hadn’t seen before,” he said.
“You get the chance to have better quality conversations, you get to have the right conversations, you uncover the real needs of clients and when you do that you tend to see an uptick in opportunities you uncover, just from your existing clients or ones you are now actively engaged with.”
The main areas in which advisers wanted more help and support included improving software and processes, business development, and acquiring new clients, the survey found.
Despite the uptick in planner confidence, however, FOFA implementation was still front of mind during the survey, which was completed in May this year, shortly before the reforms came into force.
Planners outlined the top FOFA-related challenges as administering client opt-ins, administering fee disclosure requirements, and the increased compliance burden that accompanies the reforms..
“In previous years’ studies, planners were more concerned about opt-in and not being able to provide affordable advice to lower balance clients. They have now finally awoken to the administrative burden posed by the annual fee disclosure requirements, with the proportion citing this as a challenge jumping from 12 per cent last year to 48 per cent,” Mr Peker said.
Despite how soon after the conclusion of the study the FOFA changes took effect, just 23 per cent of respondents said they were ready to administer fee disclosure statements.
Of all licensee groups, NAB Financial Planning planners felt the most FOFA-ready, the survey found.
“There is still a great opportunity to help planners, with 70 per cent saying they would like their dealer group to help them with implementing FOFA changes,” Mr Peker said.
“Fee disclosure statement and other templates are at the top of their list, but they’re also calling for more education and further enhancements to their systems.”
