There’s a mantra I hear a lot of around accessibility of advice.
It suggests that more Australians should have the ability to access expert advice, and the reason stopping them is cost.
Is it really?
No argument that more people would benefit from getting advice rather than “having a crack” themselves and learning things the hard way.
I do think in the coming years we’re going to see more people getting advice. The future is bright (if you want to see it that way).
People are becoming more mindful of the cost of financial mismanagement and aware that “buy a house and she’ll be right” is a strategy that may have had its time.
I also think in many ways the generations coming through are showing signs of being a lot better with this than potentially my own (though no doubt there will be conflicting views on that topic).
My scepticism doesn’t come from disagreeing with the value of advice. I don’t believe it for two different reasons.
My challenge on this comes from two places.
1. Is “price” the problem?
How long have we been talking about the fact that only 15% of Australians get advice and how we need to change that?
Yet year after year, we fail to do so.
I don’t think it’s got as much to do with the value of advice or the price point in isolation as it does the nature of the “offer”.
It’s something I started to question and explore about four years ago, and everything that I’ve done in terms of coaching businesses has confirmed it.
Traditionally, the advice proposition is a ‘We’ll do it all for you'”one.
There’s a big portion of the population who love this idea. There’s a correlation between the portion who do also being older and wealthier too. Essentially, they’re what we’ll call Delegators.
They make up around 15% of the population. You can see the link.
Everyone else falls into one of two categories; either Validators – who are comfortable managing most of their affairs but value help with certain aspect and someone to confirm they’re not making any major stuff-ups – and Self-Directed – who very much want to do-it-themselves but would like to be able to go to someone for assistance when-needed.
Imagine you’re one of those people, seeking advice, only to be told working with them isn’t really what you do.
This points to lack of take-up as being less to do with price, more to do with the fact that there’s a whole bunch of self-directed investors and validators out there who just look at it and go, ‘It’s not what I’m looking for.’
One of the things I’ve learned when it comes to working on pricing and businesses is that fee sensitivity is usually not what we think it is, and all decisions are made primarily on value.
Although we’ve made leaps forward these last few years, we’ve still got a long way to go on tapping into these markets, which leads to the second reason…
2. We’re not ready to make advice accessible.
These last few years most practices have had to take at least one or two steps backwards on the growth timeline.
Most of us are having to rebuild systems, processes and ways of doing things much like a brand-new firm would.
These changes require resources – time, money and effort – to implement, and many businesses are trying to do this without necessarily realising that their pricing models are no longer supplying the profit or capacity to be able to do it.
It’s the paradox I shared courtesy of Paul Graham (Y-Combinator) that the biggest mistake growing business make is not charging enough to fuel their growth.
Are we even a the point where the technology or the legislation would enable us to deal with a world where even a small portion of the unadvised 85% woke up and decided today was the day to get advice?
Over the last two years, I’ve seen more businesses take more of an interest in what it takes to truly systemise.
Very recently, two advanced businesses on the program make it their #1 priority and make it happen as I’ve never seen before.
This isn’t the norm though.
Most only start to take an interest long after they need it.
It’s less common than I’d like that the question, “Do you have an Online Operations Manual?” gets answered with a resounding “yes!”
There’s an old Chinese proverb that goes, “The best time to plant a tree is 20 years ago, the second-best time is now”.
The same is true of systems. Start now, before you really need them.
There will be a time when we will compete on price.
Right here now, I don’t think we’re there and in the short term, whilst we come through this period of change and upheaval, it’s more important for businesses to charge what they need to, to reinvest and prepare for the future ahead.
Do you agree? or disagree? I’d love to hear your views.