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Ever-increasing regulation, the squeeze on commission, industry consolidation, depolarisation and the emergence of new models are just some of issues that pose opportunities and threats to the adviser community. If only we could peer into a crystal ball to see how to navigate through all of these changes, enabling us to come out of the other side with a healthy and profitable business, filled to the brim with loyal clients. Well, perhaps we can. Australian advisers have already spent much of the last decade confronting many of these changes – and business is booming. This success has been achieved through a combination of panels, fees and wraps. When working in Australia, one of my customers was a company called Life Research – Australia’s version of MoneyFacts. Life Research reviews and assesses every life product in the market and every month distributes its research to financial advisers across the country. Advisers would use the software to search the whole of the market for a product that met the needs of their client but consumers would inevitably opt for a brand that they trusted. If a lesser-known provider came top of the list, but an Axa, Prudential or Legal & General product came in second or third, the client would usually select a provider they knew. Consumers would want unbiased advice from a professional they could trust and if that advice happened to lead to a product sale, they would select products from a brand they recognised, from a provider they believed would be around for the long haul. This natural, brand-driven consumer behaviour is one of the reasons why provider panels have been so successful Down Under. Australian advisers are used to operating via panels when it comes to investments and the same is now true of life and pension products. So do they call themselves independent? No they do not – and it does not bother them or their clients. Independence has nothing to do with being whole of market. The rules are that an adviser can only use the term independent if they are 100 per cent fee-based, which one recent estimate has put at just 2 per cent of advisers. The fact that an adviser can claim to be independent is not of prime importance to Australian consumers. The number one attribute they are looking for in an adviser is someone they trust. Embracing this new way of working has improved the bottom line for many Australian adviser firms but this was only one-third of the solution. The second is fees. Reducing commission and an increasing desire to be viewed by the general public as professionals, in the same vain as solicitors and accountants, led advisers to introduce fees for their services. According to the Financial Planning Association’s latest annual survey, 70 per cent of Australian advisers charge fees of one sort or another. This trend is also under way in the UK, with some advisers finding they are able to charge clients as much as 100 a month for professional servicing. Just nine months after introducing a retainer fee, one of our advisers has found that the monthly fees he receives from his clients now completely cover the cost of his overheads. Other advisers have taken this further, opting for 100 per cent fee-based businesses, some of these advisers billing more than 250,000 a year in fees. The third piece of the Australian puzzle was wrap, which took off several years ago. By offering a wrap service where clients’ investments and pension policies were visible at the touch of a button, advisers found that the selling part of the client relationship had all but disappeared. Discussions with clients were no longer about whether to buy a certain product, they were about asset allocation. The sale was virtually over once the wrap was set up, as every future investment simply added to the initial investment. The client relationship had moved beyond the transactional – it had become all about providing ongoing professional advice. But wrap goes beyond the transformation of the adviser-client relationship. It also has the capability to transform a firm’s bottom line and even the capital value of the business itself. Wrap-based advisers are remunerated by an annual charge of the funds under management. Over time, not only can this deliver a substantial income but it also has the potential to increase the value of the adviser’s business dramatically. Ipac, an Australian wrap-based adviser firm, was bought by Axa in 2002, having amassed an investment portfolio of A$5bn funds under management. By the time Ipac was sold to Axa, it had 33 advisers on the staff and commercial relationships with a further 87. Axa paid the principals of Ipac A$205m for their business. Unfortunately, Australian advisers cannot offer us a magic wand for the problems of rising consumer complaints and increasing regulatory costs, as they are wrestling with similar issues themselves. But the constant through-out all these changes is the trusted relationship that advisers have with clients. It is by embracing new ways of working, and continuing to deliver a service that customers truly value, that UK advisers can take advantage of emerging opportunities to build profitable and highly valuable businesses.