Financial advisers need to be less concerned with business growth and more concerned with doing well for their clients.
That is a key message shared by Vanguard chief executive Bill McNabb at the 2017 SMSF Association National Conference, telling delegates that business growth takes care of itself if the key focus is achieving the best possible outcomes for existing clients.
Discussing how financial advisers can more efficiently reach their business KPIs, McNabb revealed the $5.4 trillion firm has never implemented annual growth or sales targets.
"We actually have all outcomes based on how well a client does and our theory on this is that if you do your best for clients, growth will come. That's kind of been our mantra and it kind of instils a sense from our clients that they can place a lot of trust in us and that we're going to put their interests first," McNabb said.
McNabb also believes that advice businesses can benefit from embracing robo-advice.
"There's so much discussion around the rise of robo-advice and whether it's going to disrupt the traditional markets, and my short answer is that it's definitely going to disrupt unless you take advantage of it yourself," McNabb told delegates.
"What we're seeing is many of the best practices try to take the best from the technology and then combine it with their own value propositions to deliver more for the client, and it's great."
Providing an outlook for the investment landscape over the course of 2017, McNabb believes there is something big going on in Western democracy as a whole that will influence the markets ongoing.
"What we're seeing is the impact of 10 to 20 years of globalisation and technological evolution, and those forces are really changing the landscape. On a macro level, that has to always be kept in mind because those forces are going to be with us for a while - we should expect more uncertainty," McNabb said.
The downside for investors here is a lack of compensation for these influential factors, which McNabb said is a tough message to relay to clients.
"Our models today show global equities in the developed world and fixed interest returning a couple of hundred basis points below their 30-year averages, so what you have is two major liquid asset classes running below with more uncertainty and therefore more volatility," McNabb said.
"That is a really dangerous formula for the end investor, and that's why the adviser's guidance means so much because to help navigate through that is going to take an extra level of care and diligence because that advice has never been more important."