For a quarter century, Terry Bell has been taking the temperature of wealth management businesses and practices across the English-speaking world. Most of his “patients”—firms in his home country of Australia, as well as those in the U.S., New Zealand and Canada—are doing well, since demand for advice among the countries’ aging populations has never been greater. But most advisors, he says, could help themselves and their clients by becoming better at providing advice.
I recently spoke with Terry, an attorney and former investment company marketing executive whom I’ve known for years, and Tony Stephens, his partner at Business Health, about how advisors in the U.S. could improve their service to retirees and near-retirees.
“The good news is that the value of advice is more relevant than ever,” Terry said. “Baby boomers in all the countries we serve need advice about longevity, living in retirement, investments, wealth transfer, taxes, healthcare and other issues. Advisors don’t have to provide the solutions in all those areas themselves, but they should be able to serve as quarterback for a client’s life by finding and working with other professionals or using new technological tools to address clients’ needs.”
Providing the services that clients need and want is the key to retention, say Terry and Tony. Want to make sure your client’s wife doesn’t jump ship when she becomes a widow? Make sure you talk to her separately to find out what she’s truly concerned about, which could well be issues that have nothing to do with investing. Want to make sure your clients’ adult children stay with you after they inherit their parents’ money? Offer to help them at no cost—addressing things like mortgages, insurance and the cost of educating grandchildren, for instance.
Insights like providing holistic advice or building relationships with spouses and clients’ grown children are hardly novel or groundbreaking, and many advisors already do what Business Health recommends. The point Terry and Tony make is that while advisors have heard these “to-do’s” for years, there are probably tens of thousands of advisors in the U.S. who could be more successful if they made their “to-do” list a “got done” list.
Since Terry says that clients around the world rarely object to paying for the services advisors provide when they can see and understand the value, the challenge for advisory firms is building sufficient scale through technology and the use of specialized staff so that operations can be more efficient and productive. Scaling also involves employing more effective marketing efforts to draw potential clients to your business through social media and content that demonstrates your expertise.
While gearing up to provide the services potential clients are looking for can be a challenge, America’s 320,000 or so advisors (for a population of 340 million) have at least one edge over Australia’s roughly 16,000 advisors (for 27 million Australians).
“It’s much easier for American advisors to specialize in some way because the population is so large that it makes finding a niche practical,” said Tony.
On the other hand, Australian advisors, all of whom must adhere to a fiduciary standard, can advise on investments in their country’s mandatory and universal defined contribution plan, known as superannuation. The “super” is sort of like a Roth 401(k) plan, in which workers can contribute up to $30,000 on a tax-advantaged basis. The key difference is that employers must make minimum compulsory contributions into the plan. As of July 1, that contribution will reach 12% of an employee’s annual wages. As balances in super accounts grow, many Australians turn to advisors for help choosing among the many available investment choices, as well as for advice on other aspects of their lives.
While Australian and American advisors face challenges and opportunities unique to their own country, they are alike in being quarterbacks for their clients’ lives, Terry said. For American advisors, there are a wide variety of issues involving money, not just investing, where retirees and those approaching retirement would like to find someone who could provide answers and direction, and are willing to pay for that service. That quarterback could be you.
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