RESEARCH HEADS DISCUSS THE CHALLENGES OF FOFA AND PROFESSIONALISM

INDEPENDENT THOUGHTS AND ACTIONS

PROFESSIONAL PLANNER
I N S PI R I NG ADVIC E
ISSUE 57 - SEPTEMBER 2013

BEST PRACTICE COMPETITION 2013

BY DESIGN
TALENT MAPPING
A NEW APPROACH TO GETTING RECRUITMENT RIGHT

WINNING

INSIDE AUSTRALIAS BEST FINANCIAL PLANNING FIRMS

IN FOCUS

GETTING WHAT YOU PAY FOR WITH ACTIVE FUND MANAGERS

FROM THE EDITOR

Issue 57 - September 2013
Editor and director of retail content: Simon Hoyle simon.hoyle@conexusfinancial.com.au (02) 9227 5716, 0403 448 047 Digital editor: Leng Yeow leng.yeow @conexusfinancial.com.au (02) 9227 5717, 0402 228 848 Director of retail media solutions: Sean Scallan sean.scallan@conexusfinancial.com.au (02) 9227 5719, 0422 843 155 Designer: Alys Martin Printing: Sydney Allen Printers Mailhouse: Future Sources ISSN 1838-8906 Subscriptions are $144 inc GST per year (11 issues) within Australia Certified Financial Planners (CFPs) may apply for a free subscription

Circulation: 11,629

INSIGHTFUL, INTRIGUING AND INSPIRING

SIMON HOYLE EDITOR

Professional Planner is published by Conexus Financial Pty Ltd, an independently owned Australian company
Level 1, 1 Castlereagh Street Sydney NSW 2000

ne of the great privileges of being editor of a publication like Professional Planner is being able to talk to some of the best minds in the business. In late July, I co-hosted a round table for representatives from the six financial planning firms that made it through to the final of the Best Practice Competition 2013. When Rod Bertino and Terry Bell from Business Health approached Professional Planner with the idea of staging the Best Practice Competition, it didnt take me long to work out it was a good idea. When Jasia Fabig, head of practice management at MLC Advice Partnerships, came on board as a supporter, it was off and running. This competition was designed to identify the best-run financial planning business in the country. The six finalists who met in Sydney each run highly profitable, client-focused, efficient enterprises. They demonstrate how great businesses almost transcend regulatory upheaval a discussion about things like the Future of Financial Advice (FoFA) reform elicits blank faces and long silences. Yes, they had to think about compliance issues, but to a great extent FoFA is vindication of the way they already go about their business. The discussion was in turns insightful, intriguing and inspiring. You can read what the finalists had to say on a range of issues

in this months cover story, starting on page 12. The 2013 competition attracted a strong field of nominees, and the six practices featured in this edition showcase the very best that the financial planning profession can produce. While any one of the finalists would have made a thoroughly worthy winner, our congratulations go to Troy MacMillan and the team at The Wealth Designers in Perth, who emerged from a fairly robust discussion on the judging panel to be named the Best Practice Competition winner for 2013. *** Meanwhile, its my pleasure to announce a new addition to the Professional Planner team. Leng Yeow, a former editor of Asset magazine, has joined as Professional Planner digital editor. Leng will be taking care of www.professionalplanner.com.au and all associated things, and brings to the role many years of experience and a great profile and reputation in the industry. Leng replaces Andrew Starke, who is leaving us for new challenges. Andrew made a great contribution to the development of Professional Planner online, and I wish him well.

Chief executive: Colin Tate colin.tate@conexusfinancial.com.au (02) 9227 5702, 0412 641 099 Executive assistant & sales support: Deborah Huff deborah.huff @conexusfinancial.com.au (02) 9227 5713, 0402 604 199 CFO: Teresa Hope teresa.hope@conexusfinancial.com.au (02) 9227 5706, 0411 148 811 Director of talent and culture: Emily Brandtman emily.brandtman@conexusfinancial.com.au (02) 9227 5704, 0414 338 711 Director of institutional content: Amanda White amanda.white@conexusfinancial.com.au (02) 9227 5710, 0417 462 837 Director of conference operations: Kirrah McClelland kirrah.mcclelland@conexusfinancial.com.au (02) 9227 5795, 0478 687 986 IT manager: Prashant Sridhar prashant.sridhar @conexusfinancial.com.au (02) 9227 5720, 0405 018 964 Audience architect: Justin Grant justin.grant @conexusfinancial.com.au (02) 9227 5798, 0400 950 570 Subscriptions: Kate Jones kate.jones@conexusfinancial.com.au (02) 9227 5718

simon.hoyle@conexusfinancial.com.au

Professional Planner advisory board: Julie Berry - managing director, Berry Financial Services; Mark Brimble - Associate Professor (Finance), Griffith University; Rick Di Cristoforo - managing director, Matrix Planning Solutions; Matt Englund - managing director, Securitor and Licensee Select, BT Group Grahame Evans - consultant and principal, Mente; Paul Harding-Davis - chief executive officer, Premium Wealth; Steve Helmich - director, financial planning, advice and services, AMP; Matt Lawler - chief executive officer, Yellow Brick Road Bernie Ripoll - Parliamentary Secretary to the Treasurer and Federal member for Oxley. Deen Sanders - executive officer, Office of the Professional Standards Councils

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DESIGN

WINNING BY

The financial planning practice judged Australias best has built its success on a highly systemised approach to business, and intense attention to detail. Simon Hoyle reports.

A SNAPSHOT OF THE BEST

FUM/FUA REVENUE STAFF SALARIES OPERATIONS AND ADMIN MARKETING PROFIT MARGIN

$m Practice one Practice two Practice three Practice four Practice five Practice six 250 330 460 180 250 200

$m 2.4 3.9 4.3 2.35 2.48 1.8

% of revenue 50 41 41 30 27 21

% of revenue 17 35 16 22 15 13

% of revenue 0.8 1.3 1.7 2.5 1.5 4.4

% of revenue 29 23 41 46 56 61

Source: Business Health. Note: Practices appear in the table in random order.

here was expectancy in the air on the morning of July 26, when the finalists in the Professional Planner/Business Health Best Practice Competition 2013 gathered in Sydney. One of the practices would less than a week later be named as the winner. But for now, in the boardroom of Conexus Financial the publisher of Professional Planner no one knew who it would be. It was a meeting of equals: the six financial planning practices determined by Business Health as being the best of more than 200 firms nominated for the 2013 competition. Just getting to this stage was a significant achievement. A total of 118 practices completed a comprehensive online HealthCheck, administered by Business Health. Only one in 20 of the practices on Business Healths total database are ranked super fit. A total of 39 practices about one-third of all practices that completed the full HealthCheck were judged as super fit, which is the highest level of financial fitness under the Business Health assessment methodology. It was, in other words, an incredibly strong field. Business Health owner Rod Bertino described it as the highest quality group of entrants hes ever seen in such a competition.

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IN THEIR OWN WORDS ...

To be around this table, to be invited to be around this table, whatever happens next week you should be extremely proud to be in the top six practices in the country, because weve seen them all, Bertino said. Without a doubt, the group of finalists we have this year is the strongest by far. Jasia Fabig, head of practice management for MLC Advice Partnerships, says the competition gives a fascinating insight into what makes the best financial planning practices tick, and what licensees can do to support them better. A lot of feedback that weve had as a group is that advisers feel that their businesses have evolved and the better advisersare running very sophisticated practices and feel like the average practice development manager or licensee is not adding value anymore, Fabig says. So one of the things that Im really interested in is where do we add value, is there still a role for us in practice development managers and how do we skill PDMs to have discussions with you that make a difference and that help you grow and develop business? This is a fantastic opportunity to have access to people like this in the room and to see whats out there so we can make sure that we continue to evolve the industry, really. The average revenue of the six finalists is about $2.9 million a year. The figure for average funds under advice or management is just a shade under $280 million per practice. The average profit margin is about 35 per cent and some achieve significantly higher than that. These practices, as a group, have a ruthless focus on efficiency. They are crystal clear on their value propositions and ideal clients which includes being sure of what they do not offer, and the sort of client they will not work with. They market their services effectively, and harvest healthy referrals from a supremely loyal client base. They are wholly unashamed about charging a healthy fee for the services they provide. For them, the future of financial advice arrived long ago.

BEST PRACTICE COMPETITION 2013 WINNER:

TROY MACMILLAN

The Wealth Designers I was initially an accountant, for the first 10 years of my working life, and went into investment banking overseas and then came back to Perth. I realised there was no investment banking in Perth and went into financial planning. The business is about 10 to 11 years old but has taken a few tracks after those initial days. I had a business partner right at the start and moved away to start TWD. The reason for the move away was because we had a slightly different focus. Were focusing on what we call or what we deem [to be] the new world of financial advice. Being accountants, our aim is to bring other accountants, other people from other professions into the industry - banking, stockbroking, legal. We really see ourselves as financial project managers, more so than financial advisers. Were still doing the traditional financial planning in-house that we all know. We do investments, we manage direct investments and so on. But if we cant do it in-house, well projectmanage the client. We see ourselves as the central point for all the financial facets of a clients life. Theres 15 people in the business. We have about 150 clients. We dont take on everybody; we only take on clients that really have the perceived complexity where we can add significant value to their affairs. Theyre the clients that we like to deal with. We have trusted relationships with all our clients. We love our work. Were passionate about our work. When clients come in and see us, were really changing their perception around financial advice and the way we do that, as I mentioned before, is we take them through a process that builds trust.

THEY UNDERSTAND THAT THERES MORE TO IT THAN JUST COMING IN FOR A PRODUCT OR A SERVICE
Trust first. The trust [comes from] taking the time to understand why theyve come to see us. Once you understand why, then you understand what we can do. So we have an engagement process in place. Its not dependent on myself or anyone else; its just a process in the business. In our business everyones client-facing. We dont have a front office and a back office. And we spend a lot of time training all our staff around the engagement process. We spend a lot of time asking those deeper questions. And really, at the end, it is those big questions that we need to understand. We record the conversation and when we sit back with the client again were getting to hear in their own words exactly what the most important outcomes are and what theyre mentioning. People come in for a super fund, or they come in for whatever reason, and we turn around and say, Hang on, one thing we can do is take the time to understand why. Why it is youve come in? So that alone just changes peoples whole perception of financial advice. They understand that theres more to it than just coming in for a product or a service. There are outcomes particular to them. I think for us thats really been the most important thing. And finally, were in the business of building a business that delivers advice, rather than just being in the business of advice. Therefore we aim to undertake all our processes from client engagement, pricing, through to our own strategic planning in a manner that is consistent, methodical, specific, auditable and non-person-dependent.

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LEFT TO RIGHT: TRENT COLLINS; JASIA FABIG; TROY MACMILLAN; GREG COOK; ROB SARAFOV; ANDREW SHAKESPEARE; JONATHAN ELLIOT; ROD BERTINO

common theme that emerges from a discussion with the Best Practice Competition 2013 finalists is that change is a constant, but that the best sort of change is that generated from within. When change is self-generated, it can be predicted and controlled. The most destructive or disruptive sort of change is that which is forced onto a business. Change is often taking place in these businesses on several fronts at once. Weve gone through a lot of change weve acquired an FP [financial planning] practice, weve acquired an accounting business and weve had a change of licensee in the last six months, says Jonathan Elliot, principal wealth adviser at Collins SBA in Hobart. On the financial planning side, the perspective is [that] the amount of compliance-generated activity is immense completion of fact finds, distribution of FSGs [financial services guides], FDSs [fee disclosure statements] now, risk profiling and a lot of that ensures theres robustness to your process and your advice. But there are elements to the compliance which doesnt add value to the client discussion and what theyre seeing from you as the adviser, and [it] takes immense amounts of resources and time to deliver all that. We noticed that in the change of licensee and bringing on the new FP

business. With the accounting business, on the other hand, it was basically turn the lights off at that office and turn them on at our office. And yet, fundamentally as advisers, whether you have an accounting hat or an FP hat, you have the same level of responsibility. Youre giving advice about that persons money and their life. So theres a stark difference [in the compliance burden]. A quest for continual self-improvement means that very little from outside the business gives us cause for concern, says Rob Sarafov, a director and senior planner at Australian Private Capital in Melbourne. We just dont stop thinking about how we can leverage technology, he says. And thats mainly driven around Xplan. So to give you an idea on that the last 12 months we completed six major internal projects on Xplan. Each one was designed to automate, leverage technology, deliver better client outcomes. And all of those things are very measureable. Weve now got four [projects] currently underway and weve got another three slated. So theres continual focus on what are we doing, how do we work, what can we automate that were currently doing manually without impacting at all the client outcome? In fact in a perfect world you would design to get a better client outcome.

FINALIST PROFILE Australian Private Capital

ROB SARAFOV

Australian Private Capital is my business in Melbourne, and my partner is Michael Tratt. Were a boutique, independently licensed financial advice firm that started in 1988. We have a small team of six. Myself and Michael provide advice; we have two paraplanners, a practice manager and a client services manager. And were predominantly focused on four key areas. Our clients are small businesspeople. Theyre professionals. Theyre executives of larger firms. Or theyre ex-pat Australians living overseas. So about 15 per cent of our clients live in various parts of the world. Our investment philosophy is primarily Dimensional [Fund Advisors] in focus. So were not necessarily believers in active or index - and those of you who are familiar with Dimensionals investment philosophy will be aware of their view, which is small cap and value focused. But we [offer] comprehensive advice at the end of the day, so we provide insurance, debt, cash-flow management, tax, estate planning and so forth. Dare I say it we like to provide a holistic service. We want to be exactly what we are. Were a small firm. We have a very strong focus on worklife balance and we expect all of our team to be able to come to work at 8:45, leave at 5:15, do a good days work and go home and do the other stuff thats important to them. And as long as we continue to focus on that I think well have a happy team, happy clients and happy business.

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FINALIST PROFILE Collins SBA

JONATHAN ELLIOT

We started our business in 2003. We brought together three principals of a financial planning business with a small tax practice. We now number about 40 across accounting and financial planning. Theres cross-ownership across the whole business. So its not a joint venture. It is true cross-ownership, so everyones got equal skin in the game. In terms of services we provide, theres the accounting, taxation were moving away from small tax services to business advisory, evaluating services to small to medium enterprises. [With] financial planning, we deal with the same clients as our accountants of the business owners, but on personal wealth management. But also individuals with complexity. Were very focused within our business on achieving objectives. Weve got a one-page strategic plan, which all of our employees have. Theyre all aware of it. We communicate a lot within our business to achieve those goals. I guess were a pretty proud team and we have a lot of fun doing it as well. A very proud moment, we won a Telstra Business Award in the medium-business category for Tasmania - which I thought was great for our business, but also for our profession to be recognised amongst all businesses for that.

Unless something comes from left field that no one has anticipated and I would argue that happens rarely if theres a continual focus on improvement, youre likely to stay ahead of that curve more often than not. And as business owners were very happy we have a team that are capable of doing that.

AHEAD OF THE CURVE

Staying ahead of the curve has also helped The Wealth Designers flourish. TWDs

managing director, Troy MacMillan, says our business, and I guess in everyones business here, was developed in a way that was FoFA-compliant before we knew about FoFA. Its just we thought it was best practice, he says. It made sense to us, thats why it was done. When you develop that way and you know this is best practice, it just makes sense to you, to the consumer, to whoever it may be FoFA comes along and its not such a huge issue because your business has been operating that way for so long. Its already compliant. You dont need to do anything. So does it take your focus away? It doesnt really take your focus away because youre so focused on building a great advice business and continuing that constant push towards excellence; then the FoFA requirements arent such a huge issue like they seem to be for a lot of other people. Change is good, says Greg Cook, chief executive officer of Brisbane-based Eureka Whittaker Macnaught. If changes like FoFA help distinguish good businesses from average businesses, thats a good thing for the profession. Its a good thing for the consumer, Cook says. And by definition, if were in the camp of the better businesses, then its a good thing for us. Those that have been just cruising along and havent had the right systems in place or have had clients that didnt know

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what they were paying, or whatever, you can fake that for only so long and then you get found out, ultimately. Business Health owner Rod Bertino says the practices in the top six have got there partly through a willingness to spend money to make money. These guys probably spend in expenses far more than the average practice out there, Bertino says. But they dont spend it they invest it. Why does the profit hold up? Because theyre getting a return on their investment. Theyre not [seen as] costs to the business. Theyre investments. The profit numbers are reflecting the return on the investment. These guys were willing to invest when others were cutting back. Others were shedding staff, others were shedding technology, others were moving premises, downsizing. These guys continued to invest. Not willy-nilly; you expected a return on your investment. And as youve seen with the numbers theyre getting it. Trent Collins, a principal consultant with Scholten Collins McKissock in Mont Albert, Melbourne, says that as business owners and leaders weve got a responsibility to embrace change. And the quicker we embrace it, the quicker you can get on with things, Collins says. I chat to a few peers that just are so pessimistic about the world of financial

planning because of all of these legislative changes. And I think, well, youve got two options you can accept it and move on with it; or not, really. And I think the people who are in this room are obviously ones who are quite driven and motivated and embrace change and are quite entrepreneurial, perhaps. Our business has been fee-for-service for 10 years. So FoFA hasnt been an impact really. If youre trying to do the best possible job and have the best service offering for your clients, youve got to be embracing some sort of change to find ways of doing things better. MacMillan says success rests on a commitment to trying new things. We have what we call ready, fire, aim, he says. Just get out there and do it. Theres something better to do. Just try something different. Continually try and improve. Try something more innovative, some change in your business. Just do it, just get out there and do it. Dont wait for it. Sarafov says the most robust businesses focus on the change that delivers the biggest bang for your buck in terms of what your clients value most. You can only understand that if you understand who your clients are in the first place, he says. We could spend all our day long thinking about projects to improve the business, but what we want to do is isolate the projects

THEYRE NOT [SEEN AS] COSTS TO THE BUSINESS. THEYRE INVESTMENTS. THE PROFIT NUMBERS ARE REFLECTING THE RETURN ON THE INVESTMENT

FINALIST PROFILE Eureka Whittaker Macnaught

GREG COOK

I started Eureka Financial Group in 1993 with my original business partner. Just in the last couple of weeks weve had a change weve purchased about a third of the Whittaker Macnaught business in Queensland. When we were entering this competition it was right in the moment of conception of the new business - it was quite timely. Theres 10 planners in the business and about 12 support staff. Its fairly equally split between the Brisbane CBD office and our office at Milsons Point, just over the [Sydney Harbour] Bridge at Luna Park. Were licensed with Financial Wisdom, part of the Commonwealth Bank, and I think were now about the largest practice they have. We were Practice of the Year in our old format, if you like, in 2011, for Financial Wisdom. Ive actually just relocated to Brisbane after spending most of the last 25 years in Sydney. Noel Whittaker, who most of you would know, is an ambassador for our business. Noels in his midseventies now, and still writing a lot of columns and so on. And my business partner, Andrew Jones, is a self-managed superannuation specialist and highly regarded around the financial business network and around the profession. Weve just in the last two weeks relocated to Brisbane. So its been the busiest three months of my life with a) doing the deal, and then b) the initial weeks of implementation. But no surprises, all going to plan. And looking forward to a busy year ahead.

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FIFTY-TWO PER CENT OF OUR NEW CLIENT GROWTH LAST YEAR CAME FROM CLIENT REFERRALS. NOW, WERE VERY PROUD OF THAT STATISTIC.

FINALIST PROFILE JSA Financial Planning

ANDREW SHAKESPEARE

The business was established in 1976 by my father, Jeff Shakespeare, and he had a longrunning business relationship with Graham Poole. Back in 2001 they were able to break away in different directions and age demographics. I personally came to the business back in 2001, through university studies and the like, and personally wanted to be an investment analyst. I came out of Sydney and gave it a shot and found I didnt like it. Then I worked with MLC for a few years as well, in their SoA solutions around templates and statements of advice and their paraplanner academy scheme. So I got to visit a lot of different practices around Australia and see how employment was in terms of systems, good staffing, delegation et cetera. In 2008 I moved back to Newcastle with a practice and started advising myself. And I call it practising what I was preaching. Since then weve been able to go on this journey with the business around putting in place our investment philosophy or our advice philosophy, that advice should be catered to all spectrums of the community, not just I guess those seeking super, insurance, shares et cetera. And we believe that wholeheartedly. And also trying to build systems underneath. So weve got some ability to scale and do acquisitions and also introduce other support services like accounting and mortgage and finance. We have around 17 or 18 staff in the financial planning side. We have a lot of legacy clients in there as well, and a lot of active clients that are on our ongoing service packages. And weve been pushing towards this whole FoFA [Future of Financial Advice] change for a while now. So it was nothing new when it came on board - just really trying to tie down what a client gets, whats the value proposition to them and also to us as well.

that will help us leverage the parts of our business that will deliver the most value to our clients in the most efficient way. And the more you do that, the more the target clients start referring their friends who are target clients to you. Fifty-two per cent of our new client growth last year came from client referrals. Now, were very proud of that statistic; and so I think all of that rolls into the fact that we as a business are very clear about who our target client is. And I would suspect, maybe, a lot of financial advice businesses are not that clear.

STRONG REFERRALS
MacMillan says strong referral channels are essential to a healthy business. We find accounting relationships are fantastic because the leads come in extremely warm, he says. But also your own clients must be referring, so you need to track around how many of your clients are referring on a regular basis. And are they referring the ideal client? Do they know what your ideal client is, more importantly? We explain exactly what were looking for. We explain its people very much like yourselves, with the same complexities, who are looking for advice, a trusted relationship where we can add a significant value to their affairs. We dont put any pressure on them. We have capacity. We have capacity for five or six spots in the next three months if you know anyone, wed love to meet with them. And generally 25 per cent think of someone straight away. And one in two well get someone through somewhere down the track. So theres never pressure. Its just letting them know. If you dont ask theyll say, I didnt think you guys needed anyone I thought you were so busy!

A high-profile individual within a firm can also help. In Eureka Whittaker Macnaughts case its Noel Whittaker; in Scholten Collins McKissocks case its Neil McKissock. For Collins SBA, its business-tobusiness relationships that have proved to be fruitful. People dont come to our business because of all the services that we offer, Elliot says. They come because of a particular need - [something] very specific. We probably generate more new business from the accounting side of the business. And that makes sense because accountings not discretionary. You have to do your financials, you have to do your tax. You dont have to improve your wealth position - financial plannings discretionary. In terms of external marketing, probably the one thats paid the most dividends has actually been bringing other businesses into our business. Weve got a good relationship with a lot of different businesses within Hobart. It creates a lot of goodwill, and then we always pull out good news stories via our social media as well. So we use Facebook, we use our website, blogs. And other businesses can use that marketing material as well. So its more business-tobusiness marketing that we focus on. Andrew Shakespeare, a director of JSA Financial Planning in Charlestown, NSW, says the firm keeps its mass-marketing activities to a minimum. We have ventured into the social media space - our Facebook page, LinkedIn page et cetera, he says. But your best referrals are your warmest leads coming either from your existing clients or that internal relationship with the accountant or the solicitor or the

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WE QUITE CLEARLY, IN BOLD LETTERS, SET OUT THE HOURLY-FEE BASIS OF OUR UPFRONT ADVICE. ITS NOT ROCKET SCIENCE

FINALIST PROFILE Trent Collins

SCHOLTEN COLLINS MCKISSOCK

Were a financial planning business located in Mont Albert in Melbourne. And weve been around for 26 years now. So our founder was a gentleman Neil McKissock hence the name. And weve been with the one licensee for all of that time. So when Neil founded the business we were with Godfrey Weston [which] merged into what is now Godfrey Pembroke today. Were a long-established business, with a very broad range of clientele and probably more of a focus on retirement; and probably more work were doing these days is on intergenerational wealth transfer and estate planning. And I think thats more really from the ageing client base Neil had grown over time. Were unfortunately seeing a lot of them passing away now, so doing more on the estate planning front, and more on the transfer of wealth. We say weve got 800 active clients. Weve got a couple of legacy tails of clients from businesses which weve purchased over the past few years. But 800 that are fairly active on the books. We have 10 full-time staff, four advisers. My business partner, Matthew Scholten, is the majority equity holder, and one of our junior advisers has just purchased 5 per cent of the business over the last couple of months. Theres four people that own equity in the business. Its all about, for us, having some scale to be able to do a better job. We dont want to build an empire for empire-buildings sake. Were very conscious of having work-life balance; but you need to have some sort of scale to be able to absorb costs from compliance things - from FoFA legislative changes where theres more work thats created, where youve got to find that place to absorb those costs. Were very much looking at growing, but as I said, how we do it and how big we want to get were very clear on the direction that were taking.

general insurer. So I think building those business relationships is so important, whilst also reminding your clients of the good work you do. If I get a call up, of someone just totally out of the blue, just ringing up and they say Look, no one referred me, I go a little bit cold on that type of client. So its just not its just a harder experience I think; and whereas if it comes from one of the warmer leads its a lot easier, is probably the word. Cost-effective. MacMillan has found some success in identifying niches of clients, researching what they need and then marketing the firms services to other providers of services to that niche. A case in point is women who are contemplating divorce. Yes - theyre interesting, he says. So, you interview as many people as you can. You need to find out what are the complexities of this very narrow group and what theyre going through. And the idea is to just build your expertise up in that area. And once weve got that, we send off our research papers to all the people who helped us, and then we go out and market to that particular niche; we go out to the family lawyers all around Perth or wherever they may be. And [we] speak to them about this particular niche and our expertise and how we can actually help that particular niche to get the word out there that we do have the expertise.

And keep doing that every six months or so, just finding out new niches.

CONFIDENCE TO CHARGE
Cook says good financial planning businesses should not be reluctant to demand a good fee for the service they provide. The key is how to position the service in the minds of clients. The financial services guide that we all need to provide our clients about five years ago we set out to make that not a template document that some law firm came out with when FSRA [Financial Services Reform Act] came out, he says. You could describe it as part compliance, part marketing corporate brochure, but most importantly its describing the financial planning process and the service offer. The most important page that we focus on is a flowchart that sets out the six-step advice process, the process that we all would use I guess in one form or another. And thats a starting point for describing how we deliver advice. Thats the basis of the way we position the cost and the value of advice. We quite clearly, in bold letters, set out the hourly-fee basis of our upfront advice. Its not rocket science. Send all this information out via email and via post, prior to the meeting, and just set out what the expectations are for the client. Elliot says his firm sets out upfront

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exactly what value it is going to deliver. And we attach a price to that, he says. Then the client can decide whether thats the value theyre seeking - but we also give them options. Whether theyre a client touching our business from their accounting or the FP or the lending side, we actually propose our services and bill for our services the same way. We say back to the client what we understand their objectives to be, what the measures of success will be if they achieve that objective, and how were going to deliver that. And option one may be a very simple proposal which wont achieve all the value theyre seeking. Option three will achieve all the value theyre seeking, and therell be different fee levels. And then the client can choose. The key thing is were informing the client as to what value theyll receive, what services theyll receive, and an option. They choose for themselves and they can choose a price. Its all about the value.

WERE INFORMING THE CLIENT AS TO WHAT VALUE THEYLL RECEIVE, WHAT SERVICES THEYLL RECEIVE, AND AN OPTION. THEY CHOOSE FOR THEMSELVES

THE JUDGES VERDICT

More than 200 practices were nominated for the Best Practice Competition 2013. From this number, more than 180 accepted their nomination, and 118 completed online HealthChecks, administered by Business Health, before the competition deadline passed. Business Health assessed the completed HealthChecks and compiled a shortlist of potential finalists. These firms were then subject to on-site audits by Business Health owner Ray Henderson. At the conclusion of the audit process, the Best Practice Competition judging panel received a report into each of the finalist practices, before meeting to review the Business Health reports and to debate the findings. The panel consisted of individuals drawn from different backgrounds and with complementary expertise and insights: Paul Derham partner, Holley Nethercote  Brad Fox chief executive officer, Association of Financial Advisers Claire Mackay director, Quantum Financial Bob Neill director, Seaview Consulting  Mark Rantall chief executive officer, Financial Planning Association of Australia While not voting on the final result, Henderson was on hand to answer the panels questions. Professional Planner facilitated the judging panels deliberations. The judges met for about an hour and 45 minutes to pore over the reports and analyse the findings, comparing results and the performances of the practices across a range of criteria set out by Business Health. The judges noted that one of the finalists was a self-licensed practice, which flies in the face of the conventional wisdom that its not possible to make money running your own Australian financial services licence. Ultimately, after a robust discussion, Perthbased The Wealth Designers emerged victorious. The judges wish to congratulate each of the finalists, to acknowledge the quality of the top six practices, and to recognise the work put into the process of assessing the finalists by Business Health.

Paul Derham Holley Nethercote

OUTSIDE LOOKING IN
Great businesses arent afraid to ask for help from external parties. Over the last 18 months weve put in place an advisory board within our business, says Collins. You do get caught up in the day-to-day running of the business. Sometimes you cant see the wood for the trees. And by having this advisory board, weve got a very key industry figure on that board, weve got a partner from PricewaterhouseCoopers whos on that board. And thats been fantastic from our perspective to just make sure were on track from a strategic point of view. What its done, its actually brought accountability to Matthew and I. You know, Matthew has been an individual whos really run the show the way he wants it and hes the majority shareholder, and he will. But I mean, Neil McKissocks not sitting on the chair of the board just to waste his own time. Shakespeare says having a clear succession plan in place is crucial to enable a business to really focus on the long term. Dad Jeff - has done a great job in designing [a succession plan]. I sometimes wonder if he was actually grooming me as a child to take over, he says. But hes done a great job there. And we have a young vibrant team - in their early thirties, and that includes the accountant and that includes the mortgage and finance, and also the people we deal with in the Newcastle area. So weve got a lot of longevity there and it means I think we have a business and like a lot of people in this room. Dont discount the fact that you have got a business that is not just a one-man band - because you can walk away from it, and you can actually delegate tasks, and you can be in this room without having to be worrying about answering emails or calls. I think a lot of us have built that, and Dad always reminds me: Look weve actually built a business here that you can step away [from]; you can take the family or have some family life there, not just a sole practitioner where everything is relying on you.

Brad Fox AFA

Claire Mackay Quantum Financial

Bob Neill Seaview Consulting

Mark Rantall FPA

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PROFESSIONAL PLANNER | September 2013

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