The Roy Morgan Research Consumer Single Source survey found that in the 12 months to March 2014, 84.2 per cent of CBA financial planning clients were satisfied with the services they received.
The research also found that CBA’s high satisfaction score was driven by those aged 50 and over, with a satisfaction rating of 88.4 per cent, and with an 86.8 per cent satisfaction rating among male respondents.
“In light of the government considering change to the regulation of financial planning and financial advice as well as the upcoming Financial System Inquiry, the satisfaction with financial planner/advisers is becoming increasingly critical in capturing and retaining market share in a constantly evolving environment,” Roy Morgan Research industry communications director Norman Morris said.
“Further measures are required by the majors to maintain or increase satisfaction for the financial advice they give to ensure smaller banks and other financial institutions do not erode their customer base.”
However, Mr Morris added that it is “yet to be seen if recent adverse publicity relating to some financial planners” will have an impact on the satisfaction and retention levels, referencing the recent joint investigation by the ABC’s Four Corners and Fairfax Media into former Financial Wisdom (CBA) authorised representative Rollo Sherriff.
Following CBA in the satisfaction ratings were ANZ at 83.2 per cent, Westpac at 80.5 per cent and NAB at 80.1 per cent.
In comparison, ANZ’s satisfaction score was highest for women, at 87.2 per cent, and for those with a personal income below $100,000, at 84.7 per cent.
In addition, its lowest satisfaction demographic was those with a personal income greater than $100,000, which only recorded a satisfaction rating of 78.5 per cent, with a 79.9 per cent rating from male respondents.
The research’s release follows ASIC’s announcement that it will impose licence conditions on CBA-aligned licensees Financial Wisdom and Commonwealth Financial Planning as part of the compensation process for aggrieved former clients.
Why do we get so hung up on product? Most people would spend more on coffee in a year than on finacial products but does the barista need to justify why they are selling a particular type of coffee for a certain price. It is the strategic advice that really matters. All the products on the market are so competitive these days that one platform will usually have all the attributes and features that a client will need and if it doesn’t another product should be be used.
Ben,. for it to be $20k a year cheaper not to be aligned & totally independent, but you choose not to because you clients like the brand, is altruism above and beyond ! For every other mortal, it’s cheaper being aligned because you operate as a de facto sales force for the licensee. You get the fees you charge your client (although in practice it’s hard not to give “aligned advice” with APL’s stacked with house product) and you can either get trails or have you compliance/back office paid for – there are 100 ways to keep you locked in and transfer value up and down the food chain, and that’s why ASIC is talking big about it. At the extreme, advice subsidiaries could run at a loss and give away the pretend “advice” because they make the revenue further up at the product level. As for the clients, they naively think they are getting a good deal because it is cheaper than a real independent
As I said ROE, it would be LESS expensive for me to go to an independent licensee (or run my own AFSL). So I don’t think your argument stacks up. The fact that vertically integrated licensees are able to charge more and generate higher revenue is a reflection of the value of their brands. Don’t get me wrong, I would like to see a shift towards independence. But lets stick to the facts and listen to our clients before jumping to conclusions.
Sometimes I am not entirely sure our clients understand the impact of aligned financial advice, or even really care, as long as the advice is good.
Angelique…most “independent” advisers [u]NEED[/u] to charge more because they are not being subsidised further up the food chain in a vertically integrated model. As I said to Ben, even if they are ostensibly “independent”, their revenue model relies heavily on product providers sponsoring PD days, strategic partner payments and trails , so they are independent from a corporate perspective, but NOT from a product/APL perspective. True independence is very rare.
Angelique, if there was strong demand for independent advice, I would switch to an independent licensee and employ more staff. But the feeback I am getting from our clients is that they prefer our alignment with a brand they trust. It would probably save me $20,000+ per year if I moved to an independent, and it would be a better alignment with our culture and philosophy. However I am not seeing the demand for it. If that changes in the future I will be very pleased. Until then, I will listen to my clients and I will position my practice in a way that gives them a sense of comfort and security.
Ben I really enjoy your feedback. As I see it, the people who seek out banking financial advisers have not much choice as anecdotally really do not know where to find independent financial advisers. Independent advisers are rarity in Australia and hence they are able to charge above average fees. So desperate people have no real choice but to go to a bank. Also Australians are still very trusting of their banks, especially the older generation. It’s the younger generation that is more sceptical because they use the internet.
Ben…the problem is that 80% of advisers are aligned, and those that aren’t more often than not have business models that are too reliant on kickbacks (aka “commissions”) from manufacturers. The sad reality is that lobby-sensitive politicians have allowed an industry that is so socially important to become so dysfunctional. The answer is more than “you should have known better”….it needs to be changed.
Some of the comments here are quite naive. If a consumer walks into a bank, do you really think they expect independent advice? Of course not. Financial Planning clients are not stupid. Far from it. If they want independent advice, they will seek it elsewhere. Let’s promote the benefits of independent adivce and support unaligned firms, rather than picking on bank advisers. The vast majority of whom appear to be doing a pretty good job.
Unfortunately the industry has been allowed to develop such that product manufacturers own distribution, and this inherently conflicted vertically integrated model is the root cause of all these problems. It is nave to expect that clients get “independent” advice from a planner who is effectively paid by the manufacturer and whose APLs make it far too difficult to use non-aligned product. The industry must ultimately be broken in two as an anti-trust action, and participants must decide if they are in the advice businesses or the manufacturing business. Trailing commission (or even “client directed fees” – why not just invoice them??)must go, and the industry charge the real economic cost in a transparent way.
There is much being said of product and advice being separated, I wonder if the clients of commonwealth financial planning would score them so highly if they knew that when they were calling their “planner” they were actually speaking with a call centre operator of Colonial First State (owned by the CBA) how can this masquerading be legitimate?
It seems to me that the view is often taken that it is easier to tarnish an entire financial planning industry than to actually do some work and week out the rubbish.
The Australian public are not silly.
There will always be some rotten apples operating within every institution.
It is just your bad luck if you happen to deal with the unscrupulous minority.
The majority of practising financial advisers do help people in securing their financial security especially in retirement.
It is Choice, the media, the ISA, ASIC and the late Labor government tarring all financial advisers as crooked instead of really targetting the small percentage of advisers who do not have any regard of the Law nor care about the people who put their trust in them.
The government and the regulators need to go after the minority who do the wrong thing instead of applying a sledge hammer to crush ALL advisers.