Financial advice businesses face a moment of unparalleled opportunity. But the window will not stay open forever and advisers must act decisively or risk getting left behind. Those that hesitate may live to regret it.
Growth is good and it feels good.
In all aspects of life, be it business acumen, emotional intelligence or fitness, human beings are typically happiest when they are learning and progressing.
Admittedly, growing and being stretched can be momentarily uncomfortable. For example, going to the gym is hard yakka and noone likes being pulled up on their poor behaviour, even though it usually makes them better.
The alternative to growth is regression and when people are going backwards, be it in their career, health or financial position, they are typically unhappy.
Yet those who challenge others to be the best they can be are often criticised for being too pushy or demanding.
Australians have a tendency to admire people who are laid back, relaxed and chill.
But, in their twilight years, it is often those who didn’t push themselves and didn’t achieve much who have the biggest regrets.
In our industry, there are plenty of financial advisers and business owners who are content chugging along and have no plans to change. They are content serving 150 clients, generating $1 million in annual revenue and earning a relatively modest salary.
They are not hungry to grow their business and, therefore, unlikely to reach their full potential but they’re okay with that, at least right now.
The question is, how will they feel 10 to 15 years down the track, when their ambitious peers have built large businesses of significant capital value?
How will they feel when the time comes to retire and they can’t find a successor to buy their business and take care of staff and clients?
Imagine yourself at age 80, reflecting on life. The degree of happiness and satisfaction you feel at 80 will probably be linked to the quality of decisions and judgement you exercised throughout your life.
In short, the formula for happiness and fulfilment is maximising good decisions and minimising poor decisions. I refer to this as the happiness coefficient.
Why am I being all philosophical about happiness and growth in a financial services trade publication?
I know the pain of regret, both in my professional and private life, which makes me an unwilling expert of sorts. Regret has also made me braver, especially when it comes to taking risks to pursue the life I want.
As a teenager, I suffered from crippling social anxiety. Growing up in New Zealand, with my flaming red hair and gangly white legs, I stood out for all the wrong reasons.
For many years, my insecurities held me back.
I regret not being a more confident kid. That said, the regrets I live with are also what drives me to work harder professionally and personally.
As an industry, there is a lot to be regretful and remorseful about.
There is no question that the revelations of misconduct, greed and incompetence from the Financial Services Royal Commission were shameful.
But the past is the past and can’t be changed. We can only change the future and avoid future regrets by learning from past mistakes and making better choices.
Right now, financial advisers and the owners of advisory firms have choices.
For the first time in decades, regulatory tailwinds are on the horizon, non-bank players dominate the landscape, and debt and capital partners are waking up to the value in the advice margin. At the same time, demand for professional advice is increasing, as Australians take on more debt, accumulate more wealth and inch closer to retirement, if they’re not already there.
Supply constraints are another tailwind.
The stars are aligning, which they don’t often do, making it possible for advisers to invest in people, processes and technology, pursue growth both organically and through M&A.
Ambitious, qualified advisers are ideally positioned to capture and monetise opportunities arising from regulatory, structural and demographic change. They are Johnny on the spot.
But the window of opportunity that currently exists will not stay open forever. Advisers must act decisively or risk getting left behind. Those that wait too long may live to regret it.
While regret can’t be avoided completely (it is part of life), every effort must be made to minimise it, given its ability to detract from a person’s happiness and sense of fulfilment.
The way to counter regret is to increase quality decisions, minimise poor decisions and be brave enough to take the necessary risks to grow.
Read more of Paul Barrett’s articles in Professional Planner.