Advanced Diploma of Financial Planning

1. Advanced Diploma of Financial Planning

2. Staff Management Recruiting: Given that financial planning staff will have access to a client’s highly sensitive personal, financial and medical information, it is essential to hire people who are • Responsible – Strong sense of ethics and time management • Capable – proactive and good communication skills • Diplomatic – adapts communication styles to suit each situation • Knowledgeable, and wish to further their learning – understand importance of on-going CPD requirements

3. Staff Management Training: • This applies to all staff, not just those who are Authorized Representatives • Front line customer support staff as well as back end administration staff should be trained on the basics of policies, procedures, compliance and products. • This ensures that they fully understand the importance of their job and the role they play in the overall success or failure of the business • Money spent on training should not be viewed as an expense, but rather, as an investment in the practice!

4. Staff Management Training (continued): • Training and monitoring is particularly important for Authorized Representatives. • If an Authorized Representative makes a major error, it could result not just in that individual losing their license and being banned from the industry (and since it’s a small industry, word gets around and their chances of ancillary employment in this sector could also be compromised…), • but could also result in the principal losing their AFSL, or in fact, the AFSL of the entire Dealer Group (which could have 500 or more Authorized Representatives) being jeopardized!

5. Staff Management Training (continued): • An enforceable undertaking is an undertaking, usually given to ASIC (and accepted by ASIC) that is enforceable in a court. ASIC generally accepts this as an alternative to civil or administrative action where there has been a contravention of the legislation administered by ASIC • In the event of a major error, the license could be revoked or an “enforceable undertaking” being put in place even if the license is managed to be retained, there could be the risk of the following years Professional Indemnity (PI) insurance premiums being dramatically increased the principal would have to shop around for PI insurance and a worst case scenario could result in PI insurance being denied and as a result, the business being wound up

6. Staff Management • It is hardly surprising therefore, that many principals find it difficult to delegate responsibility to Authorized Representatives and other staff • They tend to micro manage and control every aspect of the running and operations of the business • As a result, the business flounders along, profitability is affected and the corporate vision (if any) is seldom achieved

7. Staff Management • Therefore a practice should do all it can to retain quality staff • Some principals let ego get in the way and allow a staff member to “walk”, if the staff member says they have got another offer that is paying them $5,000 (or $10,000 etc) more each year. • In actual fact, the true cost of find, training and retaining a new staff member would be considerably higher than this amount, • There could also be a disruption in the business, and a negative effect on team morale and customer irritation/annoyance (i.e. Customers may have been used to dealing with that particular staff member).

8. Staff Management • Many principals are also concerned that salaried advisers could “take” the firm’s clients with them, if they were to leave…. • Therefore it is important to have legal employment contracts in place, which prohibits this from occurring

9. Staff Management • Many principals also have little skill in managing and motivating staff, which could result in high turnover and low productivity • As a business grows, therefore, principals would be wise to hire a practice manager, who is knowledgeable about the financial planning process and compliance, as well as skilled in matters related to human resources. • Most small to medium sized practices would be closed for up to two weeks or more over the Christmas period and therefore staff would be expected to take their annual leave during this period

10. Staff Management What does this cost? • Receptionist and customer support – standard market rate, but savvy principals could pay more to attract and retain high performing individuals –remember that these staff are your front line and could be the first people that existing or new clients speak with! • For financial planners, the salary generally fluctuates based on demand and experience – it could range from $50,000 to $150,000 or higher

11. Staff Management • Source: MyCareer.com.au/salary /centre/financial-services/financial-planning • Commissions and bonuses could vary from 10% to 50% (or more for uncapped) of base salary

12. Staff Management • In today’s inter-connected and globalized world, flexibility is a key requirement • Staff in financial services could be expected to work longer hours and week ends, based on seasonal trends (end of financial year) or campaigns (responding to demand from an advertisement that the firm placed on radio etc) or managing the process of hosting a late evening seminar on retirement planning. • Successful companies generally hire from within – this means establishing a career path for all employees at the outset. • However, this would entail extra effort and care be taken at hiring the “right” fit for the company in the first instance • Besides the standard reference checks, it could also be necessary for a potential employee to undergo an Australia Federal Police check, as well as complete a numerical and psychological (Myers-Briggs etc) type assessment

13. Successful financial planning businesses expend/invest a considerable amount of time and money on their staff – not just on salaries and training but also on motivation (Friday lunches, casual Friday’s, week end retreats, Red Balloon vouchers etc Staff Management • In order for staff to better appreciate the true cost of their employment, principals should educate them as to the true cost of their salary package • Assuming that a staff member is paid $60,000 per annum – what is the true cost to the employer? • We need to factor in superannuation, pay roll tax, workers compensation, fringe benefits, training, educational support, rent paid (divided by number of “seats” in the office), IT costs, AFSL licensee costs, electricity, water, rates, office cleaning, X Mas and other “parties and lunches, morning teas etc and other sundries

14. Staff Management • Therefore, an adviser earning a base salary of $60,000, would have to earn at least $95,000 in revenues (fees and/or commissions), before they could be eligible to receive a bonus….! • This could provide the salaried adviser with a better appreciation of how their bonuses and profit sharing schemes are calculated • Bonus structures should be easy to understand and should ideally be uncapped. • Non-customer facing staff should also be included in a profit-sharing arrangement, in order to provide them with a greater sense of “ownership” and belonging in the business.

15. Staff Management • Staff should also be provided with authority to take ownership of their mistakes and be provided with monetary levels of responsibility – If you are able to fix $500 worth of an error without having to seek consent from the practice manager or principal, then if managed correctly, this will result in an exemplary customer experience for the client. (as well as savings in time and money for the practice) as minor mistakes could be rectified almost immediately

16. Staff Management Principal Compliance Career Paths (Illustration purposes only) Business Development manager Senior Planner(s) Practice Manager Sales Junior Planner(s) Para planner Marketing Entry

17. Staff Management • So, in conclusion, the staff of a business are its most valuable asset • We spend more time with our fellow workers (co-workers, bosses, subordinates etc) then we do with our own families • Hence, its important to acquire, train, motivate and retain the right staff • The Principal and Practice Manager should conduct regular group staff meetings and regular one on one meetings with each member to address any potential issues as well as to motivate staff