In 2013 PWC noted the world's most innovative companies were expected to grow by more than 60 per cent over the following five years compared with 21 per cent for more traditional operators.
Innovation and innovative practices are worth the time and energy they take to implement.Alexis George, Managing Director, Wealth Australia at ANZ
Being able to adapt can be the difference between thriving and dying in business. When you see 88 per cent of Fortune 500 firms from 1955 were gone by 2014, you can tell that rings equally true for the world’s largest and oldest businesses as well as its smallest and newest.
In late 2015 ANZ conducted research among financial planners who had adopted new and efficient ways of operating to understand – what made them successful?
The research identified two key themes – innovation is worth it and there is more than one way to go about it.
IT’S WORTH IT
Innovation and innovative practices are worth the time and energy they take to implement. On average, innovative planners outearn their traditional counterparts at a ratio of 7:6 year on year. They generate around a 20 per cent higher volume of Funds Under Advice.
They also acquire customers faster, taking on an average of 50 per cent more clients each year than their less innovative peers. This is important because it suggests the gap between the two is only going to get more substantial.
NO SILVER BULLET
It probably comes as no surprise but there is no silver bullet when it comes to innovation.
It would be great if there was just one process, methodology, framework or app we could use to capture its benefits. But the truth is innovation is a mindset.
It’s about looking at things from a different angle, coming up with new solutions to old problems and challenging your existing processes.
But the good news is incremental change is not necessarily hard or costly and can have substantial payoffs.
THE WORLD IS CHANGING
Uber, Spotify, AirBnB along with a host of other organisations around the world, are changing the way customers interact with business.
A new economy has sprung up where consumers have increased expectations around their relationships with businesses.
We’re seeing personalisation coming to the fore, where big brands are attempting to mimic the kind of individual relationships people have had with small businesses for many years.
Spotify uses big data to create highly personalised experiences for listeners. It makes recommendations based on what customers like and don’t like and what your friends are listening to. They even create a bespoke “mix tape” for you every week and dynamically generate playlists for activities like running based on your pace and taste in music.
While some consumer trends, such as the ‘on-demand’ economy tapped into by the likes of Uber are more difficult to harness in the world of financial planning, personalisation is an area where planners have a natural advantage.
That is amplified by those running small financial-planning businesses because they know their clients, their goals and their situation to a level of detail most large organisations could only dream of.
Having a deep understanding of clients can help businesses find new ways to meet customer needs and is the key to knowing where to tweak businesses for the biggest impact.
WHAT DOES INNOVATION LOOK LIKE IN THE REAL WORLD?
Innovation takes on many forms. For example Atom Bank, a digital-only start up bank granted a licence by the Bank of England, offers mobile-only banking services which are highly personal and predictive and use innovations like biometric security.
But innovation doesn’t have to be based on flashy apps or huge leaps in technology to have impact.
For a financial planner it can be as simple as using social media to create client communities, offering broad based coaching sessions to support your clients’ overall wellbeing or just approaching the process of writing the Statement of Advice in a new way so it is easy to read and simple to understand.
In the world of financial advice, clients look to planners for their expertise and deep understanding of personal and financial goals – this is where the real potential to make a difference lies.
ANZ’s research consistently revealed innovative planners were deeply customer-centric.
When innovation is built into the DNA of a business the effects can be positive and long lasting. A good way for financial planners to think about it is through the lens of people, tools and process.
What will improve your client’s overall wellbeing – beyond just their financial needs? Finances are, after all, simply a means to an end.
What tools are available to help you deliver a great advice experience – file sharing, online meetings, social media - but remember innovation isn’t in the tools themselves, it is how you use them.
How can you change the way you interact with your clients to make it easier for you to do business with them and help them achieve their goals.
It’s important to remember clients may be looking to technology to help with the advice process but they still value the relationship they have with their financial planner. Or to look at it another way, people may be happy with e-advice but they definitely don’t want an e-adviser.
Alexis George is Managing Director, Wealth Australia at ANZ