Most financial advice businesses already know the value of partnerships to provide a seamless service to clients. Insurance providers, self-managed superannuation fund specialists and accountants are all established players in a financial advice ecosystem.
But could you go further to create another level of value to your clients?
As technology brings about rapid changes to business models and strategies, the era of a standalone business proposition is well and truly over, says Elliot Cousins, Partnerships & Ecosystems at Commonwealth Bank.
And, while the idea of creating a business ecosystem isn’t exactly a new one either, the way they now operate is very different, says Cousins.
Digital technologies have been the game changer, allowing savvy businesses to step outside the square.
Amazon is the most touted example of an ecosystem master player. The company moved vertically from online bookseller to control its own warehousing and distribution and horizontally into other market sectors to sell almost anything, including financial advice.
“So, the formation of an ecosystem means that a company can now tap into a broader set of customer needs across a much wider value chain than they once would have,” says Cousins.
Customers are increasingly demanding this broader service offer from the companies they deal with. They want a business relationship to meet more of their needs.
And that presents a “really interesting opportunity” for financial advisers to understand clients’ broader needs, beyond financial advice, says Cousins. It also means a more client-focused approach than the old school broker model, based on the ‘trusted friend’ status earned by most advisers.
How far could you go?
Strategic relationships with travel industry businesses could be one option for financial advice businesses.
While for Cousins, his own experience with his financial adviser shows just how broad the relationship can be.
“He’s helped me think about career succession. Not necessarily being a career coach, but looking at education, courses that would help me achieve my life goals that are financial,” he says.
It was this influence that saw Cousins begin an MBA. “He helped me think through that idea and connected me with people doing an MBA.”
“So, it’s about reimagining the business model, and often looking to be more divergent when it comes to partnerships,” he says.
A cautionary note
Obviously, the partnerships that make up your ecosystem need to be aligned with your own strategic objectives as well as the business you’re partnering with.
And, it goes without saying that you need to be careful who you link up with. “The people are the key piece of the puzzle,” says Cousins.
For example, there are benefits of working with a big corporate such as security and dealing with a trusted brand but the trade-off may be less flexibility and exclusivity.
The agility and creativity of smaller players may be attractive but they need to be thoroughly vetted because the quality of their service will reflect on you.
“It’s really important to have service level agreements in place for you and your partner so that they uphold the level of service you deliver,” says Cousins.
“The agreement should also clarify who does what in the relationship, what the structure is and what the benefits are to both of you,” says Cousins.
The agreement should be very clear and well thought through. For example, it should outline who does what in the relationship, the benefits to both, the performance metrics and a dispute management process.”
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