Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 299

A new, client-centric model of advice

While the spotlight cast by the Hayne Royal Commission on the worst practices in wealth management industry has deservedly dominated public attention in the past year, it’s easy to lose sight of a growing global movement toward a client-centric approach.

An increasing number of advice firms in Australasia, North America, the UK, Europe and Asia are embracing a shift from transactional, sales-driven and conflicted process toward a model built upon transparency, independence and alignment with the goals of the client.

The new model of advice is showing the way forward for an industry grappling with increased regulatory scrutiny, growing compliance responsibilities, potentially disruptive technology and a challenge in finding skilled, committed and engaged staff.

Global advisers with common keys to success

Key practices common to many successful advice firms include the embrace of a consistent investment philosophy, an easily communicable value proposition, fee transparency, and a shift from commoditised tasks toward spending more time with clients.

This new model of advice effectively turns prevailing processes on their head. Instead of advice being treated as a sales process, where there is a risk of products being sold to retail investors regardless of their specific needs or risk appetites, advisers start by understanding the clients’ goals and working back from there.

This is potentially a win-win situation. Clients receive advice appropriate to their needs and circumstances. Advisers in turn are energised, transformed from being facilitators to adopting a consistent philosophy and a repeatable, transparent and robust approach to capital markets.

The regulatory challenge

Of course, the evolution in advice is coming at a time when regulators in many countries are taking a much closer and more critical look at conflicts and culture in the advice sector.

In his recent Final Report, Commissioner Kenneth Hayne said that making financial advice a profession was critical to restoring public trust. He urged the ending of the practice of ‘fees for no service’, the reduction of conflicts pervading the industry and the introduction of a credible and coherent disciplinary system for advisers.

In New Zealand, the government is introducing a regulatory regime for financial advisers which requires all advisers to retail clients to be licensed and subject to a code of conduct setting out standards of client care.

In the United Kingdom, the Financial Standards Authority in 2013 implemented a ban on commissions for retail investment advice.

The technology challenge

The growing penetration of artificial intelligence and robo-advice platforms increases pressure on advisers to demonstrate the value of their wealth management services.

Advisers are responding to this challenge by embracing new technology themselves, both to improve the client experience and to reduce the time that advisers spend on basic processes.

So, instead of a binary choice between high-end human advice and automated advice, what emerges is a hybrid model that uses technology to save firms valuable time spent gathering data and uses it instead on real, productive conversations.

This can allow advice firms to offer a tiered fee model that improves the access of smaller clients to digitally-delivered affordable and effective advice, while continuing to offer premium services to higher-net worth clients with more complex needs.

The human capital challenge

Another challenge for advice firms, amid the call for better education standards for advisers, is in finding, engaging and retaining talent. In fact, outside of improving profitability, human capital strategy has emerged as a primary concern among the firms we talk to globally.

Of the major challenges most frequently cited by advisory firms, consistently ranking near the top are recruiting and hiring employees, finding or developing a next-generation leader, and developing employees. Advisers want better training and development, advancement opportunities and career paths, and improved communication around firm goals and performance.


The advice sector is changing globally. Putting clients first, removing conflicted remuneration, embracing new technology, delivering effective advice efficiently to a wide range of clients, and professionalising the industry to restore public trust can be done and is being done.

The new model of advice is here to stay.


Nathan Krieger heads the Australian financial adviser services business of Dimensional Fund Advisors (DFA), a US-based which manages about AUD800 billion globally, including more than AUD30 billion for clients in Australia and New Zealand. DFA is convening a global adviser conference in Sydney on April 3-4 with advisers from around the world (who meet their own travel and accommodation costs).


Leave a Comment:



Eight steps to expect when seeking financial advice

Four reasons to engage a financial adviser

FoFA, the Failure of Financial Advice, Take 2


Most viewed in recent weeks

Lessons when a fund manager of the year is down 25%

Every successful fund manager suffers periods of underperformance, and investors who jump from fund to fund chasing results are likely to do badly. Selecting a manager is a long-term decision but what else?

2022 election survey results: disillusion and disappointment

In almost 1,000 responses, our readers differ in voting intentions versus polling of the general population, but they have little doubt who will win and there is widespread disappointment with our politics.

Now you can earn 5% on bonds but stay with quality

Conservative investors who want the greater capital security of bonds can now lock in 5% but they should stay at the higher end of credit quality. Rises in rates and defaults mean it's not as easy as it looks.

30 ETFs in one ecosystem but is there a favourite?

In the last decade, ETFs have become a mainstay of many portfolios, with broad market access to most asset types, as well as a wide array of sectors and themes. Is there a favourite of a CEO who oversees 30 funds?

Betting markets as election predictors

Believe it or not, betting agencies are in the business of making money, not predicting outcomes. Is there anything we can learn from the current odds on the election results?

Meg on SMSFs – More on future-proofing your fund

Single-member SMSFs face challenges where the eventual beneficiaries (or support team in the event of incapacity) will be the member’s adult children. Even worse, what happens if one or more of the children live overseas?

Latest Updates


'It’s your money' schemes transfer super from young to old

With the Coalition losing the 2022 election, its policy to allow young people to access super goes back on the shelf. But lowering the downsizer age to 55 was supported by Labor. Check the merits of both policies.

Investment strategies

Rising recession risk and what it means for your portfolio

In this environment, safe-haven assets like Government bonds act as a diversifier given the uncorrelated nature to equities during periods of risk-off, while offering a yield above term deposit rates.

Investment strategies

‘Multidiscipline’: the secret of Bezos' and Buffett’s wild success

A key attribute of great investors is the ability to abstract away the specifics of a particular domain, leaving only the important underlying principles upon which great investments can be made.


Keep mandatory super pension drawdowns halved

The Transfer Balance Cap limits the tax concessions available in super pension funds, removing the need for large, compulsory drawdowns. Plus there are no requirements to draw money out of an accumulation fund.


Confession season is upon us: What’s next for equity markets

Companies tend to pre-position weak results ahead of 30 June, leading to earnings downgrades. The next two months will be critical for investors as a shift from ‘great expectations’ to ‘clear explanations’ gets underway.


Australia, the Lucky Country again?

We may have been extremely unlucky with the unforgiving weather plaguing the East Coast of Australia this year. However, on the economic front we are by many measures in a strong position relative to the rest of the world.

Exchange traded products

LIC discounts widening with the market sell-off

Discounts on LICs and LITs vary with market conditions, and many prominent managers have seen the value of their assets fall as well as discount widen. There may be opportunities for gains if discounts narrow.



© 2022 Morningstar, Inc. All rights reserved.

The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.