Adviser habits fostering ‘irritation’ for clients

Ryan Murphy, Morningstar’s global head of behavioural insights, discussed why clients may feel disengaged with their adviser and the factors that may drive this. This followed research by the firm of almost 300 advised clients in the accumulation stage.

Speaking at the Morningstar Investment Conference in Sydney, he said the most irritating behaviours perceived by clients from 15 options were failing to provide a breakdown of fees, taking more than a week to complete a task, using financial jargon, recommending investment without considering values, and suggesting investments without going into detail. These were consistent across all ages and demographics of the respondents.

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Some 70 per cent of advised consumers said they disliked it if an adviser took more than a week to complete a task, while 79 per cent disliked being provided with a long report.

“This came as a surprise to us. We thought there might be one in five households who were expressing annoyance with their adviser, but it’s not 20 per cent, it’s closer to 70–75 per cent of households who say their adviser does at least one of these things. That is a wake-up call that there might be more annoyances than you think,” Murphy said.

“From what we’ve heard from advisers is that they don’t often hear these types of things from their clients. Many clients, but not all, are hesitant to share when they are displeased.”

These annoyances had a high correlation with the likelihood of the client recommending an adviser to another person, to continue working with them, trust the adviser or keep money with them.

“We found substantial correlation between these things indicating the irritation is connected to behaviour. This isn’t something they bottle up. This can gum up the works of your practice,” he said.

“It doesn’t take a great deal of frequency either. Even if things only happen rarely, they can still have a strong consequence.”

On the other hand, clients tend to like in-depth explanations of current events, having lots of investment options to choose from, and a focus on minimising risk rather than maximising return.

He recommended an adviser checklist for before and after meetings covering areas such as whether they used jargon, setting expectations, addressing client goals, and detailing the decision-making process:

• Set expectations about deadlines for tasks and explain why some tasks may take longer to accomplish.

• Explain your decision-making process and reasoning to the client.

• Address your client’s goals in their plans.

• Used financial jargon? Did you take the time to adequately explain the terms to the client?

• Have a conversation about your commitment to the best-interests standard.

For the client, he suggested a feedback form based on the similar questions which asked them if they understood the jargon, the fees, the reasoning behind the recommendations, and whether they believe the plan aligns with their goals.

Rather than being given straight after the meeting, this should be presented a few days after the meeting, once the client has had time to digest it and framed as an extension or follow-up from the actual meeting.

“The questions are succinct, trying to be clear and straightforward, and they are actionable. It’s not a 1–10 scale of what they think of the meeting,” Murphy said.

“A checklist that can be used as a feature of meaningful advice interaction is something that I’m becoming convinced is a really valuable takeaway.”