Robyn Burns

As Equity Trustees Ltd marks the 125th Anniversary of the founding of the company, it remains committed to expanding its services and bringing them to a wider client base, says Mr Robin Burns, managing director.

He says that the services provided by Equity Trustees are even more relevant today than they were when the company was established in the 19th century.

The necessary legislation to empower Equity Trustees, then known as The Equity Trustees, Executors and Agency Company Limited, to provide executor trustee services was passed on December 10, 1888 by the Victorian Government

Mr Burns explains that special legislation was needed whenever a trustee company was formed, as previously only individuals could act as agents on behalf of others.

“As people prospered in the colonies of Australia, many looked to make extended visits to Europe and needed trusted agents to look after their affairs while they were away.

“The colonies were rife with stories of people being defrauded by those they had employed to look after their affairs while they were absent.

“The ability of trustee companies to bring together the various skills needed to maintain and grow a personal estate, appeals today as much as it did then.

“A critical component in those days was trust, just as it is now, and it is something that is embedded in the culture of trustee companies such as Equity Trustees.”

Mr Burns says that he believes the services of today’s Trustee companies have a new relevance in meeting the needs of Australians in the 21st century.

Today, Equity Trustee’s services take in wealth management, superannuation, managed funds, responsible entity and institutional custody and administration services, as well as estate planning and aged care services and philanthropy.

“The complexities of financial management today, coupled with the need for continuation of service, mean people want a financial institution they can trust,” he says.

“For individuals, continuation of service is an issue of ever increasing importance as Australians seek support and advice throughout their various phases of retirement, as well as during their wealth accumulation years.

“With Australians today having a life expectancy that their great grandparents would find staggering, the need intensifies for trusted entities offering continuation in a range of broadly based financial and personal services.

“Investors are finding that they can’t be reliant on the skills and honesty of one person, but need access to a broad range of specialist skills and knowledge.

“While many advisers are acknowledging this with the formation of alliances and partnerships to give their clients access to additional areas of expertise, we have expanded and refined our services to satisfy the changing needs of our own clients.

“EQT remains committed to continuing to grow our operations and to bring our services to a wider base, including through the formation of business alliances.”

Increasingly, today’s Australians are more likely to find that, one day, they will be unable to cope with lifestyle and financial issues because of frailty,” Mr Burns says.

“Retirees in particular need access to support services that range through matters like managing personal finance and estate affairs, negotiating the myriad of regulations that can enhance or damage wealth, setting up appropriate investment vehicles, finding suitable aged accommodation, and operating an enduring Power of Attorney,” he says.

In light of the many corporate collapses over the years, the role of Equity Trustees’ corporate fiduciary team is equally as apparent.

“In a complex financial world, the services offered by Equity Trustees for institutional clients in the areas of trustee services, responsible entity services and custody and asset administration are of increasing importance,” Mr Burns says.

“In the 125 years since Equity Trustees first began providing trustee services to Australians, society, our country and the world have all changed in many ways. Markets have risen and fallen and risen again through depression, crashes and a GFC; on the sheep’s back; technology bubbles and resources booms.

“The range of services we provide, the types of client we provide these to, and the economic and business landscape we do this in, have all also changed significantly.

“The services offered by Equity Trustees are arguably even more necessary now as our main characteristics of offering continuity and trust are becoming increasingly in demand in today’s more complex society,” Mr Burns concludes.

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• After sliding 5.4 per cent in seasonally adjusted terms in July, the Commonwealth Bank Business Sales Indicator (BSI) fell a further 0.4 per cent in August.
• The BSI had lifted 3.3 per cent in June and 1.7 per cent in May.
• The less volatile trend estimate of spending also has slipped into negative territory, down by 0.4 per cent in August – the biggest fall in 14 months.
• The seasonally adjusted and trend estimates of the BSI results are derived via the SEASABS statistical program from the Australian Bureau of Statistics.
• At a sectoral level, 10 of the 20 industry sectors contracted in trend terms in August, up from seven sectors in both June and July. And three of the eight states and territories recorded weaker sales in trend terms in August, up from two in July.
• The Commonwealth BSI is obtained by tracking the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities. The BSI covers spending broadly across the economy rather than just retail sales, including spending on automobiles, personal services and airlines.

What does it all mean?

• While there would be some disappointment about the drop in economy-wide spending in August, it was hardly unexpected. The temporary stimulus provided by the Federal Government hands has run its immediate course and activity levels have once again fallen back to pre-stimulus levels.
• Still, tax rates were adjusted in July and coupled with the earlier rate cuts, the changes should provide ongoing support to household incomes in coming months. In addition the job market remains tight, wage growth is exceeding growth of prices and both house prices and share prices have been moving higher. So the outlook for spending remains positive, even though business and consumer sentiment levels are still subdued.

What do the figures show?

• The case for further monetary stimulus has been advanced after a disappointing survey of economy-wide spending. The latest Commonwealth Bank Business Sales Indicator (BSI) shows that spending fell by 0.4 per cent in seasonally adjusted terms in August after sliding 5.4 per cent in July. Spending had previously lifted by 3.3 per cent in June and 1.7 per cent in May.
• However spending is still up 3.5 per cent on a year ago, although well down on the 10.1 per cent increase in the year to June.
• The less volatile trend measure of economy-wide spending fell by 0.4 per cent in August, the third straight decline following downward revisions to results for June and July. It was the biggest trend monthly decline for the BSI since June 2011.
• The Commonwealth BSI is obtained by tracking the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities. And in line with the practice of the Bureau of Statistics with its retail trade data, seasonally adjusted and trend estimates of the BSI are obtained by applying statistical software. The seasonally adjusted and trend BSI results are derived from the same SEASABS statistical software. This allows analysis of the broader underlying trends that may be hidden in the raw data.
• Across sectors, 10 of the industry sectors fell in August, up from seven sectors in July. The strongest monthly trend increase in sales occurred in Mail Order & Telephone Order Providers (up 1.3 per cent), Wholesale Distributors and Manufacturers (up by 1.1 per cent) and Clothing Stores (up 0.8 per cent).
• Amongst the weakest sectors in August were Government Services (down 1.7 per cent), Transportation and Automobile & Vehicles (both down 1.4 per cent), and Airlines (nfp).
• In annual terms, four of the 20 industry sectors contracted in August, up from three sectors in July. Amongst the sectors recording declines were Airlines and Hotels & Motels.
• At the other end of the scale, spending was strongest at Wholesale Distributors and Manufacturers (up by 26.1 per cent), Mail Order & Telephone Order Providers (up 21.8 per cent), Service Providers (up by 17.5 per cent).
  Three of the states and territories recorded weaker sales in trend terms in August. Sales in NSW fell by 1.0 per cent while sales fell 0.4 per cent in Victoria and fell by 0.1 per cent in Western Australia. The strongest results were in Northern Territory (up 0.9 per cent), South Australia and Tasmania (both up 0.7 per cent) followed by Queensland and the ACT (both up 0.1 per cent).
• The trend BSI has now risen for 15 straight months in Northern Territory, for 14 straight months in Queensland, for 13 straight months in South Australia and 11 straight months in the ACT.
• In annual terms, no state or territory had sales below a year ago. Strongest growth was posted in South Australia (up 16.0 per cent), followed by ACT (up 11.3 per cent), Queensland (up 10.1 per cent), Northern Territory (up 8.4 per cent) and Western Australia (up 7.8 per cent).

What is the importance of the economic data?

• The Commonwealth BSI is obtained by tracking the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities. The BSI covers spending broadly across the economy rather than just retail sales, including spending on automobiles, personal services and airlines. The BSI is a gauge of economy-wide spending.

What are the implications for interest rates and investors?

• The Reserve Bank certainly has the firepower to cut rates again. No doubt it will weigh its options carefully in coming months, assessing elements like the Aussie dollar, the European debt crisis, an economic recovery in China as well as home prices and consumer and business borrowing.
• The Reserve Bank watches all indicators very closely, and as demonstrated by the recent article in its quarterly Bulletin, takes a keen interest in the CBA Business Sales index. The drop in spending in August keeps a rate cut on the table.
• The September quarter inflation data due out in late October is likely to be the next catalyst for interest rates. Confirmation that inflation remains contained could open the door to for a further rate cut in November.

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For those of you too young to remember, IPAC was then one of the most successful planning businesses in the country which eventually sold for a reported $120million. Embedded in this sale price was the premium paid for the way the client advice process had been packaged and for the 400% productivity gains that had been made in servicing ongoing retainer clients in the years approaching the sale.

That’s right…400%. Let me explain how…

Without context there is no meaning
Twenty was unique.  The financial planning division was split in two between the new business advisers and the ongoing retainer advisers. Advisers for each division were recruited on “type” with “hunters” hired for the new business area and “shepherds” hired for the retainer area.

At the time the business was very focused on generating profitable ongoing fees from retainer clients almost to the point that the new business area was considered by some to be a strategic loss leader designed to source prospects and then convert them into retainer clients.

The advisers from both areas were trained in Myers Briggs personality profiling techniques in order to make them aware of their own personality traits which in turn helped to equip them to identify and accommodate the traits of their prospects and clients.

During the course of the plan presentation meeting, there would be a knock on the door of the client meeting room and the retainer adviser assigned to the client would walk into the room.  The new business adviser would introduce them as their potential ongoing adviser should they decide to become a retainer client.

This process was very carefully scripted and rehearsed to ensure that client’s understood that rather than loosing their principal planner, they were gaining another adviser who was across their file.

Using this process, the new business advisers had a success rate of over 85% in converting prospects to clients and ultimately a 90% success rate in converting these clients into the retainer service.

Despite these numbers however, the business was severely challenged by a lack of leverage or productivity once the client went into the retainer service.

In short, a retainer service team which consisted of a principal adviser, a paraplanner and senior support person could not service more than 60 client relationships without client satisfaction levels dropping…yes we were doing ongoing satisfaction surveys back in the late 90s.

Every time the 60 client ceiling limit was reached, a new team was recruited along with an additional 36 square metres of space, desks, computers etc.

In other words we had a stepped cost curve chasing our revenue curve and from a business perspective this was simply unsustainable.

The retainer service offer consisted of 4 meetings a year with their ongoing adviser one of which was the client’s AGM while the other 3 meetings were investment reviews.

In our experience, once the client had gone through two meeting cycles (24 months) most of them felt sufficiently well informed and confident in the service to voluntarily drop the three review meetings a year and simply attend their AGM.  When this happened, the productivity and profitability from the client would improve dramatically.

So, when I took over as the manager of the retainer area, my brief was simple:

• Find out why the servicing ceiling was stuck at 60 clients relationships
• Find a way to raise this ceiling
• Find a way to reduce the time taken for the clients confidence to reach the point where they voluntarily reduced their servicing requirements
• Maintain or improve client satisfaction along the way.

Now before you all start saying to yourself “…and for his next trick”… read on.

The problem
I started my investigation by firstly interviewing all the principal advisers in the retainer division to gain an understanding of the existing work flows and to see if there were any obvious road blocks that we could remove quickly.

During these interviews, however many of the retainer advisers levelled some very pointed criticism at specific advisers in the new business area claiming that they were handing over problem clients from the outset. These clients were continually unsettled about investment performance and a month would rarely go by without the business receiving an irate letter from a client asking why their investment fund had underperformed the “XYZ” fund by 30bps in the previous month.

“Red herring” questions from poorly inducted clients that would take two people in the asset management division a week to prepare and send a written response to. These clients ate the resources of the business like there was no tomorrow destroying leverage and profits along the way.

As cranky as the retainer advisers were with the problem advisers who sent them clients who were servicing “nightmares”, the retainer advisers were just as complimentary about some named advisers in the new business area who sent them clients who were servicing “saints”.

So with a growing suspicion that the leverage problems in the retainer service were originating in the new business area, I immediately turned my attention to those advisers to ask them what they were saying to their clients.

As you would expect, the advisers sending clients who were servicing were servicing saints were telling their clients all the real/good stories such as cash flow management, diversification, time not timing, volatility and so on.

By contrast, the advisers who were responsible for sending the nightmares to the retainer area were “selling” market timing, stock/fund picking and investment tricks. We even had one adviser who would promise their client that we would call them before markets crashed and we would call them just before they bounced back!

From these answers it became immediately clear to me was that there was a direct commercial link between what the advisers was saying to their clients during their early meetings with them and whether or not that client retainer relationship would flourish or fail overtime.

In fact it was the error, omission and variation that existed in the way the new business planners set client expectations upfront about what the business could do for them and how it would add value that was destroying leverage in the ongoing servicing area which in turn had imposed the 60 client ceiling.

So the challenge became how could we get all the new business advisers to consistently tell the same story that the “good” advisers were telling their clients?

The solutions
In the first instance the answer to this question was that we couldn’t. Those advisers who were selling the investment guru VP were senior advisers who were rusted on to the business and despite helping them to re-write their “scripts” and providing them with hours of training and mentoring the variations persisted.

It wasn’t until we decided to alter their remuneration packages and provide them with some client facing software that we started to get some consistency.

With regard to their remuneration packages, up until this point the new business advisers were rewarded entirely on the volume of new business revenues that they generated. They had no incentive to either sell the retainer services or to care about how the client’s expectations were being set when they did so.

In order to improve these outcomes we decided to re-apportion a significant part of their bonuses based on the number of clients referred to the retainer area. We also introduced a number of qualitative KPIs the most important one of which was the time it took for their clients to voluntarily reduce the number of meetings per year. This KPI had clear benefits for the business and it put pressure on the new business advisers to spend time with their clients educating them.

With regard to the client facing software, what started as a massive cash flow projection spreadsheet turned into the Lifetime Model which incorporated much of the approach and language I use today with my clients as we go thought a Goals Based Planning process.

With the GBP software being used with each and every client, we had managed to get the new business advisers to systematically set and manage client expectations the same way every time…a little like industrial design meets financial planning.

Before we knew it , we had created an absolute turn key solution for the business.
The results
Over the following two years the 60 client ceiling had increased to 120 for the same level of resource i.e. one retainer team.  Two years after I left IPAC I was told that this number had doubled again to 240.

In addition, the time it took for the client to voluntarily elect to attend just one meeting a year reduced from 24 months to 13 months.

While by any definition, these results they were staggering, what I learned next was simply breathtaking.

At one point, the IPAC directors wanted to produce a client video of the way we were setting and managed clients expectations around a goals based process and the Lifetime Model.

Part of the video production involved interviewing several existing clients in their homes and asking them what they really liked about the retainer service. While I had written the questions down for the director I wasn’t allowed in the room when they were being asked.

Of the many answers we received, the response from one particular retired couple in their 70s I will never forget.

When they asked Ray what he liked about the service he said he loved the portfolio valuation and cash flow reports that he received saying…“I can cross every “t” and dot every “I” and that makes me feel like I’m in control.”

While this was a typical response from a control freak, Margaret’s response was a revelation.

She said…“All I know is, if anything happens to Ray, things will continue on as they have in the past.”

In other words, when it came to their life savings, she didn’t care whether or not her husband of 40 years was alive or dead!…she had placed all her faith in the PROCESS she had gone through and not in her life partner or the advisers that she and Ray had met along the way.

What this response meant to me was that as far as Margaret was concerned, we had somehow diminished the relative importance that she had placed on an individual to deliver the service in favour of the process being delivered by the business.

I’ll leave you to contemplate just how earth shattering this shift was in the mind of the client and what it could mean for your business.

In the meantime keep an eye out for my next article entitled…“The Client Experience IS THE PRODUCT”

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Research suggests that 66% of business collapse is due to financial difficulties associated with poor financial management. According to Dun & Bradstreet reports, “Businesses with fewer than 20 employees have only a 37% chance of surviving four years (of business) and only a 9% chance of surviving 10 years.” 

At any measure even the more optimistic estimates make for very sobering feeling. It is estimated only 90 in 1000 business survive. 

Key reasons for business failures

• failure to Plan. This refers to the failure to plan in regards to a marketing plan as well as business plan – includes the use of “SMART” goals
• lack of appropriate managements skill
• lack of adequate financial capital
• lack of knowledge capitalisation
• refusal to seek professional help
• not managing cashflow –  inventory is not cash – profit is not cash
• resort to discounting
• operations not efficient
• failure to embrace technology and new trends
• lack of business succession plan

Business financial literacy
 Literacy, language and numeracy are often seen as “core” or foundations skills for society. The industry Skills Council of Australia states that “53% of working age Australians have problems have difficulty with numeracy skills.”

A commercial subset of these are Business and Financial literacy. These latter two types of literacy, or the lack thereof, are considered one of the biggest impediments to the success of new small business start-ups. The sobering statistics on failure rates of new business launches have been documented in a myriad of research and comments from academics and business commentators alike.

On the highest scale, the effects of this can be far reaching. The results can be anywhere from “serious”, to having a material impact on National prosperity and well-being. The associated loss in productivity can be traced to a direct effect on National GDP, wealth and wellness in their populations. The reality of the situation is borne out similarly across the international financial playing field as well with similar impact figures being registered across most of the economically developed countries.
 
This indicates a powerful connection between financial literacy and demographic/socio-economic factors. Studies show the existence of behavioural variation amongst groups whose financial literacy score was in the top 20% of the population and those below that percentile.
 
People in the top group were more likely to use a wider range of financial information sources and retrieve advice from various windows of information such as financial publications, financial web-sites and seminars as opposed to 38% of the lowest group. This result was very similar when it came to obtaining advice from an external financial planning or management expert like an accountant, tax specialist or financial planner (versus 43% of lowest quintile).
 
Members of the top group were more likely to be adequately insured in order to control their exposure to risk. They also showed greater awareness of investment risk. Other areas affected by lower levels of business and financial literacy were the lack of understanding of the requirement for accurate and honest disclosure with insurances matters. The lower levels also registered poorly on their fulfilment of responsibilities in relation to repaying consumer debt and the implications for an individual’s credit rating if repayments are late as well as the responsibility to keep personal banking details secure.
 
The conclusion to be drawn in these instances is that limited knowledge and comprehension of financial matters can lead to negative financial outcomes resulting in significant potential loss.
 
Members of the lowest group were also a lot less confident that they were capable of making an effective complaint about a bank or other financial institution if something does go awry- 50% versus 63% of the total sample. The lower levels also, in comparison to those displaying relatively elevated degrees of financial literacy, were less likely to employ financial behaviours that potentially could result in their banking being less expensive and more efficient. They also compared debit interest rates and mortgage products less than the more financially literate groups.
 
Other areas that seemed to be affected were the need for savings on a regular basis as well as the need to make their own provision for a comfortable retirement because of their belief that ‘the Government will make up any gap” Another disappointing area to note was that the percentage of investors who believed that diversification of investments was less important has remained lower in the groups with less financial literacy.
 
It is widely accepted that the above considerations link in strong correlation with a lack of pertinent management skills and insufficient capital to account for up to 75% of all causes of SME failure. Alternatively, it maybe stated simply that low levels of business and financial literacy result in a “lack of sophistication” of some SME owners. Educated and capable SME owners seem to comprehend the advantages of compensating for their own deficient skills or knowledge by seeking external aid with the above matters However, less sophisticated and less capable SME owners may seem either unwilling to or unaware of the need to reach out for help, feeling that they should do everything themselves.
 
The effects of lack of Business and Financial literacy can typically result in the following:

• loss of wealth – personal and national
• loss of national productivity
• lack of available small business contractors to meet segment demand
• loss of skilled knowledge and intellectual capital from the small business sector
• loss of employment in the small business sector
• reduced national savings
• lacklustre growth
• ptential bankruptcy
• lss of savings
• rduced life expectancy through stress
• fmily and social breakdown
• suicide, despondency, depression
• substance abuse
• stress related illness
• increase in crime
• higher incidence of business fraud
• insurance fraud
• lack of savings in retirement
• increased dependency on social security
• and many others.

Rapid advances in technology have resulted in the formations of new business methods, systems and processes that require a more skilled and progressive workforce that once was the case. Globalisation has made the commercial world smaller and competition is the new order. This has brought with it levels of quality assurances and accreditations of each activity in the business cycle thus requiring increased worker skills in commercial literacy to maintain and drive further improvements.
 
In addition, we are faced with an aging workforce. This group haven’t always had access to technology which has put considerable pressure employers to retain and re-skill their senior workers.
 
The importance of the core foundation skills mentioned above cannot be overstated. A lack of these skills can be a major obstacle for gaining rewarding and fulfilling employment as well as those seeking to progress up the economic food chain. These core skills result in higher educational achievement which in turn leads to higher levels of workforce participation and higher productivity resulting in more of the “clever country” status that politicians love to spruik about.

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The online space is getting more competitive every day when it comes to financial services websites. There is competition from other financial services firms, as well as the growing number of lead generation websites that are coming from outside of the industry.

Financial advisers should already know the importance of original website content, but this week Google have made further changes to their search algorithm that means original content on its own will no longer be good enough, and they now want your content to be kept fresh as well.

Google states that more than one-in-three search queries will be affected, which is certainly a significant number. They had this to say in their release:

“Given the incredibly fast pace at which information moves in today’s world, the most recent information can be from the last week, day or even minute, and depending on the search terms, the algorithm needs to be able to figure out if a result from a week ago about a TV show is recent, or if a result from a week ago about breaking news is too old.”

So how can smart financial advisers benefit from these changes?

Let’s take a look at the average financial services firm website. Generally they will look very pretty, and they’ll have the standard pages that cover the firm’s services, staff profiles, contact details and maybe a few technical articles.

Some firm’s websites will have a blog or news section, but the majority I’ve seen are rarely updated, with some showing the ‘latest news’ from three years ago!

When combined with some link-building from the firm’s SEO provider, currently these sites tend to rank fairly well for search phrases such as ‘Sydney Financial Planner’ etc.

But with the latest Google changes, there is a window of opportunity for smart financial advisers to leap ahead of their competitors by adding fresh and original content to their websites on a regular basis.

So how can you do this? Well the first step is to get a blog or news section onto your website that you can easily update yourself. The next step is to start typing!

As financial professionals we do a huge amount of reading and listening every week. There are CPD articles to be read, conferences to attend, product updates from the insurers and fund managers and plenty of news in the press. There are many of sources of new information in our industry, so why not spend half an hour putting together a quick summary for your website? You don’t have to be a Walkley Award winner; you just need to throw together 500 words of content that are relevant to the industry and the clients that you want to attract.

If you can do this once a month you’ll give your website a healthy boost in the rankings. If you can increase it to once a week you should see some major results, and if you can start pumping out multiple items every week, the sky (or the number one ranking in Google) is the limit!

An additional benefit of regular content is that you can send out more frequent Facebook and Twitter updates, which gives more chances to interact with your current and potential clients.

The internet is increasingly the first place that people go to when searching for information on life insurance and investment, so if your website can out-rank your competitors you will have the greatest chance of attracting new clients at the expense of your rivals. Start updating your website today with fresh and original content, and you will be rewarded.

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When receiving leads from referral partners you are generally not competing against anyone else for the business.  Instead the referral partner has identified a potential need, and it is your job to explore that need with the general target of making a sale.

Internet leads are almost the opposite of this.  In this case the potential client has already identified their own need, and they are simply looking for the right financial adviser to fulfil that need for them.

In many cases a potential client will be requesting quotes or information from a number of websites, so you could be finding yourself competing against other financial advisers who have also bought leads for the same client.

So instead of convincing the client that they have a need, you are convincing them that you are the right person to fulfil their need.

Outright purchase or commission split?
This is one of the major questions to think about when buying leads.  Do you want to pay an upfront fee to purchase the lead outright, or do you want to pay a split of your commission on any successful sale?

Both options have their advantages, and the right answer really depends on a few different factors.

If buying outright, on average you will be looking at $50 per lead.  If going down the commission split path, you will generally need to share around 25% of your commission depending on whether or not trail is included in the split.

Let’s take a look at both options, assuming an average commission of $2,000 and a conversion rate of 25%.  We’ll use a number of 100 leads.

If you bought the leads outright you would be paying $5,000 for a commission return of $50,000 that you don’t have to share.  This would leave you with a profit of $45,000.

If you were paying a commission split you’d have to hand back $12,500 of your $50,000 commission, and potentially an ongoing share of the trail.  This would give you a profit of $37,500 which leaves you $7,500 worse off that if you’d have bought the leads outright.

At first glance it appears that buying outright is the better option, but it really depends on the quality of the leads.  If you were only able to convert 10% of the leads the figures would be quite different.

Based on the reduced conversion rate the profit (excluding office expenses etc.) would be $15,000 whichever way you went.  If the conversion rate dropped below 10% a commission split would become the more profitable option.

As I mentioned earlier, the right answer really depends on the quality of the leads and what sort of conversion rate and average commission you expect to achieve.

The target client
The target client of the lead generating website will have an impact on how desirable the lead will be for your business. Many of these websites market themselves on offering the lowest premiums, and it’s not uncommon for potential clients to request a quote from more than one website.  If you are not prepared to compete based on price, then these leads may not be right for you.

On the other hand, if you are fairly new to the industry and are still learning about the products, purchasing leads from a website that targets insurance for surgeons or barristers may not be the most suitable option at this stage.

Compliance
From my experience, most financial advisers buying internet leads are happy to leave the compliance issues up to the website owner.  After all, the adviser does not own the website and has no connection other than buying leads, so what’s the problem?

Most of the people running these lead generating websites do not have financial qualifications, and as they are not AFLS holders or Authorised Representatives (nor are they passing themselves off to be) they have little or no responsibility with regards to ASIC.

This doesn’t mean that their websites all contain incorrect information, indeed many of them are very well put together, but it does leave the door open for mistakes and issues to slip through.

Recently I conducted a full compliance audit on one such website, and whilst the majority of the site was okay, there were a couple of major errors that could have led to a successful complaint by a client.

If a client has relied upon information on that website when making a decision to proceed with your recommendation, there is the potential that you could get dragged into a complaint involving the client, the website owner and of course yourself.

Potential compliance issues shouldn’t turn you off internet leads completely, but it is important to be comfortable with the content on any website that you are considering buying leads from.

To buy or not to buy?
There is no doubt that internet leads will continue grow into one of the largest sources of clients for financial advisers, and with the current trend of the most successful sites being owned by people who are not financial advisers, it is clear that the buying and selling of leads will continue for a long time.

Is a strategy of buying internet leads right for you and your practice?  It really depends on your target market and your way of doing business.

If you partner with a lead generating website that fits your business well, it can be a terrific way to boost your client numbers and potentially introduce some diversity to your client book.  It can allow you to concentrate on providing good service and advice whilst someone else takes case of bringing in the leads.

But if you partner with a website or a group of websites that don’t fit your business, you could find yourself wasting a lot of time and money on leads that will never become clients, or clients that you don’t really want anyway.

The alternative to buying internet leads is to build your own lead generating website, but that’s another whole subject!

About Shane Moore…
Shane has been in the financial services industry for over a decade.  Since selling his own successful firm he has been working with other advisers to improve their online marketing efforts through the distribution of original and regular content.  For more information visit www.ShaneMoore.com.au

The post Tips for financial advisers buying internet leads appeared first on AdviserVoice.

After such an encounter, I’ll always make the effort to check out the website once I get back to the office. Invariably, I will see the same thing – websites built to impress the adviser rather than potential clients.

These websites are generally nothing more than flashy online corporate brochures. Yes, they generally look very nice, but that’s about it.
The adviser probably looks at their website for the first time, reads all about themselves and how good they are, then sits back and thinks “how could anyone not want to use my services!”

Want to know a secret?

A potential lead scanning the internet doesn’t care about how many certificates you have or how many years you’ve been in the industry for.
When they first visit your website they don’t really care about you – they care about themselves and how their needs can be fulfilled.

Does your website tell visitors how good you are, or does it tell them how they can have their needs met?  In many ways the two are connected, but the difference is in the delivery.

The potential lead will not be ready to buy when they visit your site for the first time, they will simply be looking for information. As they search around, they’ll be putting together a list, perhaps subconciously, of which sites have been helpful and which sites haven’t. If you’re not on that list, you don’t even have a shot.

Your website needs to be built with your ideal client in mind. It should be built for them, not you.

If you were looking for a new laptop, would you be interested in how many awards the salesperson had won or how impressive the company CEO was?

Unlikely.

Instead, you’d want to know how that laptop could help your business and maybe some tips to help you choose a laptop.

So if someone is searching online for information on insurance or investment, what do you think they are looking for? I can assure you it’s not a long winded spiel about you and how special you are!

If your website is not delivering the leads you hoped it would, it’s time to step into your client’s shoes and see things from their perspective.

About Shane Moore…
Shane has been in the financial services industry for over a decade.  Since selling his own successful firm he has been working with other advisers to improve their online marketing efforts through the distribution of original and regular content.  For more information visit www.ShaneMoore.com.au

The post Does your website benefit your ego or your business? appeared first on AdviserVoice.

Once your website has gained the lead, then it’s your job to convert that lead into a happy – and profitable – client. Getting prospective clients to your website is often the biggest hurdle, but in this article I’m going to skip that step and assume that the visitor has already made their way to your website.

There are many different styles of adviser websites out there, and just as many different styles of enquiry forms. I’ve delved deeply into many financial advisers’ websites; firstly as part of my compliance role when I was approving adviser websites for a large dealer group, and more recently as part of my research for both my own websites and those of the advisers I partner with.

Many adviser websites use a very basic enquiry form that simply collects contact details and perhaps some brief details about the type of service the client is looking for.  This type of enquiry form often features prominently on the front page of the website.

While I like the idea of having the enquiry form as a ‘call to action’ on the front page of the website, I do wonder about the effectiveness of such forms, and the large amount of front page real estate that is lost in making space for the enquiry form. If someone is only providing their name and contact details, they know very well that all you’re going to do with that information is use it to call them back.  Not that there’s anything wrong with that, but if the prospective client knows that will be the case, why wouldn’t they just call you themselves?

On the other hand you have the more complex enquiry forms.  These are generally far too large to place on the front page of the website, and will instead have their own dedicated page.  Obviously you would still be placing prominent links to this page from your front page, and every other page of your website.

I have had plenty of advisers – and so called web experts – tell me that the shorter enquiry forms are far more effective.  Their rational is that a prospective client is much more likely to complete a form that takes thirty seconds rather than one that takes ten minutes.

But I disagree.

My company owns a portfolio of websites that gather life insurance leads.  Over the years we have used short and long enquiry forms, placed in different sections of the websites, and the results have been very different.

We have found that short contact forms on the front page deliver far fewer leads than our more complex forms, and furthermore the leads from the complex forms convert into paying clients at a much higher rate.

One of our most successful websites actually features our most complex enquiry form.  Over the years we have continually added more questions to the form and made it more difficult to complete, yet the number of enquiries we receive continues to increase every month.

The form on this website is now so comprehensive that two dealer groups have accepted it as a fully completed fact finder.  That saves a huge amount of time, and also makes for an extremely good lead.  Not only do we know a lot about the client before the first phone call, but we also know how serious that person is due to the amount of time they have invested in completing our lengthy form.

You may be thinking that a lot of prospective clients will leave the form half-finished when they get tired of answering questions, but our statistics show that we have very few ‘dropouts’ with our forms.  If someone isn’t committed to filling out the form we probably don’t want the lead anyway.

I know that most web designers will keep telling advisers that short enquiry forms are better, but if you take that advice then I believe you are costing yourself business.  I have spoken to plenty of financial advisers who have spent thousands on their websites, only to receive not a single lead from it.

Now I’m not saying that a longer and more complex enquiry form will result in a flood of leads for any old website.  What I do believe is that a well designed website that ‘funnels’ visitors through to a comprehensive enquiry form will be more effective than one that expects the visitor to enter their contact details on the front page without having had a chance to read through the website.

Online strategy is all about experimentation.  If you currently use a short enquiry form on the front page of your website, try investing a few dollars in having your web designer implement a more detailed form, and use the saved space on your front page to further promote your services.  If it doesn’t work, little has been lost.  If it does work, you could have a lot to gain.

About Shane Moore…
Shane has been in the financial services industry for over a decade.  Since selling his own successful firm he has been working with other advisers to improve their online marketing efforts through the distribution of original and regular content.  For more information visit www.ShaneMoore.com.au

The post Online enquiry forms appeared first on AdviserVoice.

• The Federal Government has proposed a new tax on carbon emissions of $23 a tonne to apply to 500 of the biggest corporate emitters from July 2012.
• The aim of the tax is to increase the price of goods produced by carbon-intensive industries and thus change behaviour of consumers and businesses. But the extent of the compensation mechanisms substantially reduces the effectiveness of the tax. If consumers are no worse off, and in fact many are better off, then you don’t have the incentive to change behaviour.
• The cost to the budget over the next four years is $4,281 million, including assistance packages for the steel and coal industries ($2,906 million in 2011/12). The Government expects the carbon tax to reduce emissions but income per person will be lower than in the absence of the scheme. Employment is tipped to increase by 1.6 million over the next nine years after rising by 2.18 million over the past nine years.
• The proposed tax on carbon emissions could work to reduce global emissions provided other countries moved at the same time. The risk of moving too quickly before other countries is that it reduces the competitiveness of Australian industries.

What does it all mean?

• The good news is that the release of details of the proposed carbon tax reduces uncertainty. The price of carbon is finally known as are the compensation mechanisms. The bad news is that the uncertainty has only just begun for consumers and businesses. Now Australians will be inundated with the pros and cons proffered by politicians, industry associations and interest groups.
• The Federal Government is proposing a tax on carbon emissions based on the theory that the global increase in carbon emissions is contributing to climate change. If you believe in the theory then it is reasonable that efforts are made to reduce carbon emissions. But a global problem requires a global situation. Australia represents just 1.5 per cent of global carbon emissions. So without significant efforts by large countries – China, India and the United States – then Australia’s efforts will have negligible effect.

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• At the end of the day, a tax on carbon emissions would work to reduce global emissions provided other countries moved at the same time. The risk of moving too quickly before other countries is that it reduces the competitiveness of Australian industries. Ahead of similar measures to price carbon by other countries, a better move in the interim may be to legislate for the gradual reductions of carbon emissions by companies.
• Unfortunately, as Greens senators acknowledge, there is the real risk that the Kyoto Protocol agreement to reduce carbon emissions will not be renewed when the United Nations climate change summit is held in Durban later in the year.
• In practical terms, the efforts to tax carbon emissions represent a lot of effort to produce little benefit. Australian consumers are likely to be rightly sceptical about whether their cost of living will rise. The Government says 5 million households will be super-compensated for the carbon tax. But until the compensation comes through, consumers will remain sceptical, entrenching “consumer conservatism”. While it is proposed that 90 per cent of households will be compensated, it still means that 10 per cent will be made worse off by the introduction of a new tax.
• In pure economic terms, there will be debate that the carbon tax – as currently proposed – is the right approach. As Professor Judith Sloan pointed out in The Australian on July 9/10, taxation measures are assessed on three grounds: efficiency, equity and simplicity. Professor Sloan argues that the tax fails on all three grounds. Clearly the tax is far from simple, as the Prime Minister acknowledged at the press conference. On efficiency grounds, the tax falls short of ideal for the simple fact that other countries are not moving at the same time. And on equity grounds, some in the community are actually made better off by the introduction of the carbon tax while others are made worse off. In addition, the extent of compensation measures reduces the effectiveness of the tax as it fails to change consumer and business behaviour.
• In political terms, the Federal Government faces significant risks in proposing a new tax on carbon. The tax is far from simple, making the selling job more difficult. The “Clean Energy Future” documents alone total 250 pages. And, rightly or wrongly, the fact that Julia Gillard ruled out a carbon tax ahead of the election will mean that consumers will be sceptical that they won’t be worse off with the introduction of the new tax. Consumer confidence is currently weak with the principal concern being on the rising cost of living and impact on household finances. The new carbon tax won’t ease those concerns – especially in the short term.· If opinion polls show a substantial fall in support for the Government then this will increase political uncertainty. Understandably foreign investors will be reluctant to put money to work in Australia until the carbon tax legislation is passed. There will be on-going hesitancy to invest until the tax begins in July 2012.

What are the details of the proposed tax? (note: much of the detail below is directly taken from Government documents)

• The Federal Government has proposed a “Clean Energy Future” program” that involves:
  • introducing a carbon price
  • promoting innovation and investment in renewable energy
  • encouraging energy efficiency
  • creating opportunities in the land sector to cut pollution.

• The Government has committed to reduce carbon pollution by 5 per cent from 2000 levels by 2020, and by up to15 or 25 per cent depending on the scale of global action. These targets will require cutting expected pollution by at least 23 per cent in 2020. The Government also commits to a new 2050 target to reduce emissions by 80 per cent compared with 2000 levels.

Carbon price

• The Government is proposing a tax of $23 per tonne on carbon emissions to begin from July 1 2012. The carbon pricing mechanism will be fixed for the first three years and will rise at 2.5 per cent per annum in real terms. On 1July 2015, the carbon price will transition to a fully flexible price under an emissions trading scheme, with the price determined by the market.
• A carbon price will be applied to domestic aviation, domestic shipping, rail transport, and non-transport use of fuels. A carbon price will not apply to household transport fuels, light vehicle business transport and off-road fuel use by the agriculture, forestry and fishing industries. Household fuel is exempt from the tax. The Government intends to apply a carbon price to heavy on-road transport from 1 July 2014. This measure was not agreed by the Multi-Party Climate Change Committee.
• There will be a household assistance package and it is estimated that 50 per cent of the revenue from the carbon tax will be spent on household assistance.
• The Federal Government claims that the average household will see cost increases of around $9.90 per week, while the average assistance provided will be around $10.10 per week. The effects of the carbon tax are estimated to lift the Consumer Price Index by 0.7 per cent in 2012/13.
• The cost of electricity for the average family is expected to increase by $3.30 a week with gas up $1.50 a week and food up by $1 a week.
• The Federal Government is also proposing that the revenue raised from the carbon tax will allow the tax-free threshold to be more than trebled to $18,200 in 2012-13. From 2015, the tax-free threshold will be further raised to $19,400.
• The Government estimates that 4 million households will be better off – that is, they will receive assistance that covers at least the average price impact of the carbon price on their cost of living.· Pensions, allowances and benefits will also increase. Pensioners and self-funded retirees will get up to $338 extra per year if they are single and up to $510 per year for couples, combined. Families with two children will get up to $220 in extra Family Tax Benefit Part A, and other families will get up to $110 per child. Families will get up to an extra $69 in Family Tax Benefit Part B. Allowance recipients will get up to $218 extra per year for singles,$234 per year for single parents and $390 per year for couples, combined. Self-funded retirees on the Commonwealth Seniors Health Card (CSHC) holders will get $338 per year for singles and $510 per year for couples, combined, through their Seniors Supplement.

The Climate Change Authority (CCA)

• The CCA will be established by legislation as an independent body to provide expert advice on key aspects of the carbon pricing mechanism and the Government’s climate change mitigation initiatives. The Government will remain responsible for carbon pricing policy decisions with significant and far-reaching implications. A Clean Energy Regulator will be established to administer the carbon pricing mechanism within a limited and legislatively prescribed discretion.

Federal Government initiatives

• Clean Energy Corporation: The Federal Government will invest $10 billion in a commercially orientated Clean Energy Corporation. Of the total $5 billion will be dedicated to investments in renewable energyprojects. The other $5 billion stream will fund investments in renewable energy, energy efficiency and clean technology.
• Australian Renewable Energy Agency (ARENA): The Government has proposed establishing a new,independent statutory body – the Australian Renewable Energy Agency (ARENA). “The Australian Government is funding around $3.2 billion in renewable energy investment to promote the research and development of renewable energy technologies”.
• Carbon Farming Initiative: The Government proposes a Carbon Farming Initiative for farmers and landholders that take steps to reduce carbon pollution. It will do this by creating credits for each tonne of carbon pollution which can be stored or reduced on the land. These credits can then be sold to other businesses wanting to offset their own carbon.
• Clean Technology Investment Program: The program will support manufacturers by providing $800 million in grants to upgrade to less polluting equipment and cleaner technologies. It will boost their international competitiveness and help keep manufacturing strong. Funding will be provided on a co-contribution basis,with industry providing three dollars for every dollar provided by the Government.
• Clean Technology Food and Foundries Investment Program: The Government will provide $200 million in grants to help companies in food processors, metal forgers and foundries industries to upgrade to less polluting equipment and cleaner technologies.
• Clean Technology Innovation Program: The Government will provide grants of up to $200 million through the Clean Technology Innovation Program over five years to support business investment in renewable energy, low emissions technology and energy efficiency. This could support manufacturers to develop new clean technology products.
• Energy Security Fund: The Government proposes an Energy Security Fund. The Government will seek to negotiate the closure of around 2000 megawatts (MW) of generation capacity by 2020 and provide transitional assistance to the most strongly affected coal-fired power stations.

Carbon permits

• The Government will allocate Australian carbon permits to the most emissions-intensive and trade-exposed industries. This will shield eligible businesses from the full impact of a carbon price, while retaining incentives to reduce carbon emissions.
• The most emissions-intensive and trade-exposed activities will initially be eligible for 94.5 per cent shielding from the carbon price. A second category of assistance will provide an initial shielding level of 66 per cent of the carbon price. This will apply to activities assessed as having a lower risk of carbon leakage. LNG projects will also receive a supplementary allocation to ensure an effective assistance rate of 50 per cent, in recognition of the wide dispersion of emissions among some prospective LNG developments. The assistance rates will be reduced by a carbon productivity contribution’ of 1.3 per cent a year to provide additional incentives over time for these industries to reduce pollution.

Assistance for small business

• The Federal Government says that small businesses will benefit from being able to claim an immediate tax deduction for assets costing up to $6,500 under changes to business tax deductions. This will help business invest in more energy efficient equipment and help small businesses to respond to the carbon price. The small business instant asset write-off threshold will be increased to $6,500. This applies to businesses with a turnover of less than $2 million a year.

The Jobs and Competitiveness Program

• The Jobs and Competitiveness Program will support local jobs and production, and encourage industry to invest in cleaner technologies. The ongoing program will provide $9.2 billion of assistance over the first three years of the carbon pricing mechanism, targeted at companies that produce a lot of carbon pollution but are constrained in their capacity to pass through costs in global markets. Assistance will be provided to around 40-50 of these ‘emissions-intensive trade-exposed’ industrial activities, such as steel, aluminium, cement and zinc manufacturing. Businesses producing over 80 per cent of the manufacturing sector’s emissions are expected tobe eligible for assistance under this program.

Additional measures proposed by the Government:(additional to that agreed by Multi Party Climate Change Committee)

Treatment of heavy on-road transport

• The Government intends to apply an effective carbon price to fuel used by heavy on-road transport from 1 July2014 through changes in fuel tax credits. This will significantly broaden coverage of the carbon price as heavy on road vehicles account for over 25 per cent of road transport emissions. Moreover, as rail, domestic shipping and domestic aviation will face an effective carbon price, extending coverage to include heavy on-road vehicles will provide consistent treatment across the freight sector.

Steel Transformation Plan

• The Steel Transformation Plan will provide assistance worth up to $300 million over five years to encourage investment and innovation in the Australian steel manufacturing industry. This will help the sector transform into an increasingly efficient and economically sustainable industry in a low-carbon economy. The Steel Transformation Plan is designed to improve the environmental outcomes of steel manufacturing and promote the development of workforce skills.

Coal Sector Jobs Package

• The Coal Sector Jobs Package will provide assistance over six years to the most emissions-intensive coal mines. The Government has allocated $1.3 billion to this program.

Coal Mining Abatement Technology Support Package

• The Coal Mining Abatement Technology Support Package will provide transitional assistance to help the coal industry implement carbon abatement technologies. Assistance will be provided in the form of grants on a co contribution basis. The Government has allocated $70 million over six years to this program.

What are the implications for investors?

• The United Nations climate change conference in December may not renew the Kyoto agreement on carbon emissions. Simply, there has been a re-assessment of the climate change theory. While the Clean Energy Future documents warn of global warming and point to a similar situation in Australia, long-run figures from the Bureau of Meteorology indicate that the gradual upward trend in temperatures has occurred for almost 150 years. The risk isthat Australia ends up leading the world on an issue whether there is less agreement on the right response.
• The Government gives the impression that it has created the perfect tax – where no one is worse off, in fact some are better off, and Australia takes a lead over other countries to price carbon emissions. But if it was that easy and painless then Governments would have done it years ago.
• The simple fact is that there is a cost to the economy – the budget bottom line is worse off by $4.3 billion with much of that impact actually made in the current financial year. Employment and income are expected to increase with the carbon tax, but will do so at a slower pace than without the carbon tax.
• Foreign investors will continue to be cautious on investing in Australia. If the carbon tax is introduced and runs successfully then foreign investors may warm to Australia – but success is unlikely to be proven for a number of years. There are risks in Australia moving at a faster pace on pricing carbon than other countries. The economy will be negatively affected in the short-term, albeit modestly. And then there is the mining tax, which has yet to be passed by Parliament.
• The Australian dollar is unlikely to be significantly impacted. If anything the impact is mildly negative, but that clearly would be welcomed by miners, rural producers, manufacturers and tourism operators.
• The extent of change and uncertainty for the coal and steel sectors as well as manufacturers will lead to a softening of investment support in the short term.
• While the Government has been generous with income and taxation support for households, consumers are likely to remain sceptical. It is important to remember that household incomes have been rising but the sharp lift in the cost of living – especially gas and electricity bills – has still made consumers cautious about spending. Electricity and gas are inelastic goods meaning that substantial changes in prices lead to only small changes in demand.
• Any increase in the headline rate of inflation makes the Reserve Bank nervous. So the Reserve Bank is more likely to lean in favour of rate hikes in the first half of2012/13 as the new tax gets bedded down.The other risk relates to the potential for business to lift prices in response to higher electricity and gas prices.

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• The unemployment rate was unchanged at 4.9 per cent in June. The participation rate edged up from 65.5 per cent to 65.6 per cent. The working age population rose by 19,600.
• Employment rose by 23,400 people in June. Economists had tipped job gains of around 15,000. But the May result was sharply revised lower to show job losses of 500 (previously showed job gains of 7,800).
• Full-time employment rose by 59,000 in June (May jobs were down by 29,400) and part-time jobs fell by 35,600 (Mayjobs rose by 28,800).
• Average hours worked rose 0.5 per cent in June after rising by 0.5 per cent in May. The number of hours worked is up 1.7 per cent on a year ago.
• Across the states and territories unemployment rates in June were: NSW 5.2 per cent (4.9 per cent in May); Victoria4.6 per cent (5.1 per cent); Queensland 5.3 per cent (5.2 per cent); South Australia 5.1 per cent (5.4 per cent); Western Australia 4.2 per cent (4.3 per cent); Tasmania 5.5 per cent (5.8 per cent); Northern Territory 3.7 per cent (3.4 per cent); ACT 4.0 per cent (3.8 per cent).
• Victoria led the job gains in June (up 18,200) followed by South Australia (up 6,900) and Western Australia (up 2,600). NSW led the job losses (down by 17,000), followed by Northern Territory (down 1,000 in trend terms), Tasmania and Queensland (both down 700), and ACT (down 200 in trend terms).

What does it all mean?

• The latest employment data certainly looks robust – especially given the surge of 59,000 new full-time jobs. However it is just one month’s data and the monthly job figures tend to be volatile. Keep in mind that the prior two months saw full-time job losses of almost 80,000. In fact the previous month’s job gains of 7,800 has now been revised to show job losses of 500 people.
• A better indication of the labour market would be the unemployment rate which has effectively gone nowhere for seven months. It is clear that there is a better balance in terms of supply and demand in the labour market. Even annual employment growth rate has eased in recent months from a six-year high of 3.6 per cent to 2.0 per cent in June – the weakest growth rate in 16 months.
• Reading between the lines it is clear that the soft readings on economic activity are being reflected in the job market figures. Manufacturing, construction and the services sector all remain soft, while businesses are trimming new orders and profitability is being affected – given the lack of activity. No doubt the softer economy is ensuring that businesses remain cautious and more circumspect about future hiring.
• Overall the job market is in reasonable shape, but it is now going sideways. Certainly today’s result accords with the views of the Reserve Bank that the job market isn’t overly tight at present. Overall the Reserve Bank will remain hesitant about increasing interest rates anytime soon. CommSec is still pencilling in one rate hike over the next six months but the data flow would have to record a substantial improvement to justify the rate hike.
• Across the states the bulk of the job losses were recorded in NSW – consistent with the other key data releases this week showing weak retail spending and even weaker building approvals. It’s also worth noting that if you add up the employment results for the individual states the job gains total a much more sedate 8,100 instead of 23,400. It seems the seasonal adjustment process is playing a part in the overall result.

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