1. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Advanced Diploma of Financial Planning

2. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services This week we examine some of the most common services offered by financial planning institutions and practices. What do these entail? Are they limited or holistic? How do practices make themselves stand out from the crowd?

3. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services Offered (Illustration purposes only) Limited/ Scaled Clients SERVICESSERVICES Specialized Comprehensive Holistic

4. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services Limited Advice or Scaled Advice Until fairly recently, ASIC and other institutions were of the opinion that limited advice was not possible i.e. you could not be half-pregnant – you were either pregnant or not pregnant and the analogy was you either provided advice or did not provide advice

5. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services Limited Advice or Scaled Advice However, apparently, this is now possible Scaled advice is advice about a specific area of an investor’s needs, for example insurance, or about a limited range of issues. This in contrast to traditional ‘holistic’ advice where advice is provided on all aspects of the client’s financial circumstances in a full financial plan. It is expected this will enable consumers to access beneficial advice at an affordable cost.

6. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services Specialized Advice For clients wanting advices on specialized areas such as self managed superannuation or estate planning, the majority of advisers would refer these clients to advisers that specialize in these areas Most advisers focus on financial planning advice in relation to life risk (personal insurances such as Life, TPD, Trauma, Income Protection etc) or superannuation (accumulation, consolidation or retirement pensions), Hence there is a niche for more focused specialized services

7. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services Specialized Advice These is akin to a GP doctor, referring a patient to a specialist. This is practical, because like medicine, the field of financial planning is vast and constantly changing…. It takes years of experience on the job, along with Continuous Professional Development and mentorship, for advisers to be competent in any given particular niche

8. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services For instance, the self managed superannuation funds is so complex, unless an adviser is constantly in this space, it would be prudent for other advisers to refer the occasional client wanting advice in this area, to a specialist Most advisers offering these specialized services would usually work in conjunction with a professional such as an accountant (self managed super or tax strategies) or a lawyer (estate planning) Advisers in this space usually deal with a small number of high net worth individuals and have traditionally operated on a fee for service model. Specialized Advice (continued) In most instances, the other professional (lawyer or accountant) is also a qualified and licensed financial adviser.

9. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services Self managed superannuation funds are the fastest growing segment of the superannuation industry and a large number Australians who have SMSF’s, need access to specialized advice Specialized advice could also entail providing specific advice to a specialized niche of clients – i.e. women or divorced women There is a much larger number of men in financial planning as compared to women, hence there is a real demand for qualified women in this industry.

10. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services They also desire to do this in a tax effective manner and minimize litigation amongst their heirs after death Furthermore, with the high rates of divorce, they wish to protect any assets they hand over to their adult children, who could lose up to 50% of these assets if their marriage breaks down High Net Worth (HNW) Clients also wish pass their wealth from one generation to the next

11. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services Hence, the setting up of trusts and effective estate planning and tax minimization is key to offering specialized financial planning services to these clients There have been significant changes regarding family trusts, service trusts and corporate beneficiaries over the last few years Planners in this space need to be fully aware of how these changes may affect their clients

12. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services Holistic Advice The word ‘holistic’ is relatively new in the lexicon of every day English language It appears to be used extensively across such diverse areas as financial planning, yoga or cuisine! In the financial planning space, the word holistic is termed to mean that a planner would cater to address the clients financial needs and financial objectives in a holistic manner – i.e. in its entirety

13. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services Holistic Advice (continued) Needless to say, this is easier said than done and the majority of planner who appear to state that they offer a holistic service, may in reality, not actually be doing so..... Rather, they would focus on their traditional area of expertise For instance, this could be superannuation and/or personal insurances, and then refer the client to a specialist for other areas

14. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services Comprehensive Advice Very few financial planners would possess the skill or qualifications to provide comprehensive advice As you would be aware by this stage, finance is a vast and complex field and also includes law, taxation and risk protection and wealth protection (insurances) Even in the instances where planners offer investment and personal insurances advice, most planners would first focus on one area and after this has been implemented and completed, they would arrange for the client to make appointments to commence working on the other area(s)

15. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services “THE OFFICE” The first major waves of financial services reforms, which were introduced in the early 1990’s, witnessed the retirement of a number of “advisers” (many of whom were above the age of 55 or 60 These advisers usually commenced their careers, many years ago, as life agents. They “sold” life insurance (usually whole of life or endowment style polices and represented just one company (i.e. AMP, National Mutual or AXA etc)

16. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Many “sales” were made by “knocking” on doors These “advisers” were almost always men and were excellent sales and communication skills. They usually did not handle investments, except for regular investment plans or long term savings policies It was therefore usual for these “advisers” to offer a mobile service and not work out of an office, until their insurance book had reached a larger size

17. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services The ongoing raft of reforms, audits and higher educational qualifications (and ongoing continuing professional development) has ensured that contemporary advisers do not “sell” products With amalgamation amongst major players, it is getting rarer for advisers to work exclusively from home (i.e. Just have a home office) Some dealer groups such as AMP, would in fact insist that their non-salaried adviser NOT work from a home office, but instead, have appropriate offices in a professional setting, with approved signage, reception area etc It would be common for some advisers, who spend a considerable amount of their money in renting offices in the CBD, to insist that clients visit them – i.e. They would not visit the client Other advisers, however (especially during the first few years of practice) would still visit clients at their homes or the client’s office, on the insistence of the client

18. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services How do you “Cut across the Clutter” and stand out from the competition? As a exercise, you may wish to purchase the Sydney Morning Herald on a Wednesday and review the money section – you will notice advertisements from a variety of financial institutions, offering a range of services, from high interest deposits, cheap insurances, low interest loans and high yielding investments! Most of these institutions are house hold names (CBA, NAB, AMP etc) and have already established a brand name and therefore established “trust” with the prospective client.... A self employed financial planner, licensed through a dealer group(or via their own AFSL), therefore needs to cut through all this clutter and establish their brand and trust

19. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services An astute financial adviser would instead focus on their competitive advantage and core strengths and then carve out a niche Higher and on-going education is a key requisite, especially for these advisers (i.e. specialist course in SMSF or Life Risk Insurances) Advertising is a very expensive and sometimes, non productive option, in this regard.

20. TAFE NSW -Technical and Further Education Commission Advanced Diploma of Financial Planning Copyright TAFE 2014 Services In conclusion, most financial advisers commence their careers as “GP’s” – i.e. They offer a basic advice service related to superannuation, investments and personal insurances Over time, these advisers could specialize in certain areas or continue to be “GP’s” Advice can be limited/scaled, holistic or comprehensive In all cases, it is essential that services are aligned with the dealer group’s Approved Product List (APL) and with the adviser’s limits of authority.