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.

Summary

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:

RELATED ARTICLES

Taskforce recommendations to shake up aged care

Five charts show predicaments facing financial advice

Eight steps to expect when seeking financial advice

banner

Most viewed in recent weeks

Australian house prices close in on world record

Sydney is set to become the world’s most expensive city for housing over the next 12 months, a new report shows. Our other major cities aren’t far behind unless there are major changes to improve housing affordability.

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

The super tax and the defined benefits scandal

Australia's superannuation inequities date back to poor decisions made by Parliament two decades ago. If super for the wealthy needs resetting, so too does the defined benefits schemes for our public servants.

Latest Updates

Planning

Will young Australians be better off than their parents?

For much of Australia’s history, each new generation has been better off than the last: better jobs and incomes as well as improved living standards. A new report assesses whether this time may be different.

Superannuation

The rubbery numbers behind super tax concessions

In selling the super tax, Labor has repeated Treasury claims of there being $50 billion in super tax concessions annually, mostly flowing to high-income earners. This figure is vastly overstated.

Investment strategies

A steady road to getting rich

The latest lists of Australia’s wealthiest individuals show that while overall wealth has continued to rise, gains by individuals haven't been uniform. Many might have been better off adopting a simpler investment strategy.

Economy

Would a corporate tax cut boost productivity in Australia?

As inflation eases, the Albanese government is switching its focus to lifting Australia’s sluggish productivity. Can corporate tax cuts reboot growth - or are we chasing a theory that doesn’t quite work here?

Are V-shaped market recoveries becoming more frequent?

April’s sharp rebound may feel familiar, but are V-shaped recoveries really more common in the post-COVID world? A look at market history suggests otherwise and hints that a common bias might be skewing perceptions.

Investment strategies

Asset allocation in a world of riskier developed markets

Old distinctions between developed and emerging market bonds no longer hold true. At a time where true diversification matters more than ever, this has big ramifications for the way that portfolios should be constructed.

Investment strategies

Top 5 investment reads

As the July school holiday break nears, here are some investment classics to put onto your reading list. The books offer lessons in investment strategy, financial disasters, and mergers and acquisitions.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
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. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. 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.