Honesty and trustworthiness are the top attributes consumers and small business owners look for in a financial adviser, according to new research released today by MetLife Australia.
The report found that those who have established trusted relationships with their adviser say the royal commission will have no impact on their advice relationship.
The MetLife Adviser-Client Relationship Report 2018 examines consumer and small to medium enterprise (SME) attitudes to purchasing life insurance through an adviser, based on a survey of consumers who currently use an adviser, consumers considering seeing an adviser in the next two years, and SMEs with up to 20 employees.
MetLife Australia head of retail sales Matt Lippiatt said there were marked similarities between all three groups.
“Across the board, consumers and SMEs want to establish a genuine relationship with a financial adviser they can trust,” he said. “They clearly value the adviser who goes the extra mile to listen to them, understand their needs and communicate regularly and clearly.”
Transparency and experience also rank as key reasons for selecting an adviser. Once the adviser-client relationship has been established, consumer and SME clients expect their adviser to genuinely care about them, speak to them in easy to understand language, and maintain that honesty and trustworthiness.
MetLife also examined consumer and SME attitudes to the Hayne inquiry, which has generated plenty of negative press for some advisers.
When asked about the royal commission, just over half of consumers (56 per cent) and over a third of SMEs (37 per cent) said it would have no impact on their advice relationship. Further, 38 per cent of SMEs and 20 per cent of advised consumers said it would make them even more likely to visit their financial adviser.
“What’s clear from these numbers is that the royal commission has put the spotlight on the need for quality advice and its enduring appeal,” Mr Lippiatt said.
“Given that as many as four in 10 consumers and SMEs have been with their adviser for more than five years, it seems that many clients have established a high level of trust and confidence in their adviser’s integrity and abilities.”
Overall, the MetLife research data shows that Australians are reasonably happy with the service they’re receiving from their financial adviser, with 61 per cent of consumers and 59 per cent of SMEs rating their adviser ‘excellent’ or ‘very good’. Just 13 per cent of consumers and 11 per cent of SMEs rate their adviser ‘poor’ or ‘fair’.
“We’ve seen a lot of negativity about financial advice in the media, but consumers and SMEs are both telling us that there are good advisers who are doing a great job,” Mr Lippiatt said.
“However, given that the majority of Australians currently don’t have an adviser, the challenge for us as an industry is to make financial advice more affordable and accessible to the people who need it.”
The industry loves justifying itself: the headline is sold incorrectly. It should read: The report found that those who have established trusted relationships with their adviser say the royal commission will have no impact on their advice relationship. There is nothing appealing about the industry to want to either seek help/advice nor encourage people to work in it. FP industry will not be around in the next decade. Its micro managed, its not scalable, everyone protects their geographical location, the industry is all about self interest, never has it unified into one. Old people with old mentalities still work init. Its not a question that people in the past did not want to seek help, it was a question that advisers never made themselves known and more importantly wanted/needed to the community.
‘challenge for us as an industry is to make financial advice more affordable’
More training and development required, more compliance overlay, financial planning software not up to standard. Good luck trying to make advice affordable.
We don’t need to make financial advice more affordable, the fintechs will do that for us. They cater to people that don’t have money nor the complexity to deal with financial planners. We just need to migrate our service offering to high net worth clients that can pay us the right fees for our rightful service. Compliance will catch up with those fintechs at some point in the future, right now they can do whatever the hell they want with ASIC’s full exemption. They don’t even need to act in the client’s best interest and produce cookie-cutter SOA’s, and ASIC is totally fine with this.
At this stage the only answer is to target higher net worth clients and have less of them.
More work per client equals more fees per client, equals higher levels of service which equals more profitable business.
The days of giving advice to anyone at all who cant afford the fees is over.
They can’t afford advice or wont be prepared to pay and we cant afford to waste our time.
There will simply be a very large slice of the population that will never receive advice.
Agree with the first half of your post. It is surprisingly easy to develop a client base of no more than 50 clients; provide them complete financial advice (much more than just investments and insurance); meet with them all 3 times a year; and charge them a flat fee that allows me to make (after costs) more than $250k/year. The key is to move your/their thinking from “how much per hour you charge” or “what is the $ value to the client” to one of “what will it be worth to the clients to know their complete financial house is in order”. This is much more rewarding and also better not having to worry about what will happen when the commissions get turned off.
Re the second part of your post, there will always be a large part of the population that don’t get advice. This is for a range of reasons but i don’t see it changing much from the current level of 80%.
The compliance costs are killing the financial advice profession and removing the time advisers can spend with their clients actually delivering the information, strategy and discussion needed to ensure the clients have a full understanding of their decisions.
The compliance regime must be addressed immediately and needs to be totally overhauled.
As Kenneth Hayne has indicated, more and more compliance is not necessarily the answer.
In fact, the winding back of compliance requirements may in fact have a very positive effect on the entire delivery of financial advice from the consumer and adviser perspective.
perhaps winding back of compliance can begin after 2019 when all advisers sit the exam and progressively to 2024 when everyone will need to have a post grad qualification
What no mention of vertical integration, grandfathered commissions or how fees are charged ?
Transparency and trust are more important. It goes to show how out of touch our self appointed experts of the industry and what it takes to act professionally. Shouldn’t be a surprise if you have had engaged clients for 5 years or more. Perhaps that is the problem.
The majority of Australians don’t have an adviser or do not seek advice because they are either too lazy and apathetic, think someone else will look after it for them, don’t think that premature death, illness or retirement will happen or are just not very smart.
The others believe they should be able to get comprehensive, quality advice for about $450, because the other $3500 should be spent on footy tickets, grog or cigarettes, a punt on the gee gees or banging it through a one armed bandit with flashing lights and music at the local club.
None of these people will ever seek appropriate advice and that’s a good thing from the adviser perspective because they are not the target market, not profitable and not worth the time and effort to spend time talking too.
They should be pushed toward the Industry Super Funds where they can believe they are receiving advice for no cost as that will give them more funds to blow on the important things that matter.
Hard to see why they’re not queuing up with that attitude.
“challenge for us as an industry is to make financial advice more affordable”
I am not sure how this can occur seeing as compliance and PI costs are up, insurance commission rates are down (and more than likely open to further change)? More time is taken to process and triple check advice (just in case…) and the FASEA costing (in $$$ and time) is about to hit (well maybe, it depends if they can finalise)?
Our industry is in a huge state of flux, awaiting release of the RC in February and its recommendations, which will no doubt cause further change.
Smile and wave boys…… Smile and wave
Maybe now the Adviser bashing will abate somewhat? somehow I don’t think so, vested interest aside I think we are now seen as a group who are here to stay.