Intra-fund advice to affect 20 per cent of planning revenues

Published: Financial Standard (20/04/2010) - View original article

Advisers risk losing one in five of their clients if demand for intra-fund advice services become mainstream - but transactional advice could be the key to ensure advisers maintain an edge in the market.

Cameron O'Sullivan, a financial adviser and director of Provisio Technologies, said advisers can expect a turf war once major superannuation funds roll out intra-fund advice services to their members.

"Advisers will find it harder to justify their value to those clients with simpler financial needs, as these clients can potentially get advice free of charge from their superannuation fund."

O'Sullivan said higher net worth clients would be unlikely to depart an adviser for free intra-fund advice. "Around 20 per cent of clients bring in roughly 80 per cent of revenue for most advisers, and vice versa.

"This 20 per cent of clients who are better off have more complicated financial demands, so they are unlikely to be threatened.

"But let's think about that 20 per cent of revenue brought in by roughly 80 per cent of clients - 20 per cent still accounts for a substantial amount of revenue which advisers cannot afford to lose."

To maintain these clients, advisers will need to be able to offer "transactional" advice around areas such as transition to retirement, contributing to super, investment choice, and insurance, in a much more efficient process.

This requires increasing profitability by lowering the cost of advice per client, via automation.

"There are several tools available which allow advisers to dramatically lower the cost of advice per client without sacrificing any quality," O'Sullivan said. "The savings are made in automating otherwise laborious practices."