Client-centric models trigger satisfaction spike
A new survey of financial advice clients has seen a rise in satisfaction levels, but advice businesses are not converting the more positive sentiment into increased profits.
The Zurich-Beddoes Institute's Designing the Future report – which was compiled off the back of data provided by more than 3,000 clients and 300 advisers and released yesterday – found that client satisfaction has risen from 8.4 out of 10 in 2012 to 8.9 out of 10 in 2014, representing a 6 per cent growth rate across three years.
The report also identified strong year-on-year growth in “clients’ strength of relationship” with their advice practice, up 7 per cent overall over the same period.
Commenting on the findings, Zurich Life and Investments' head of communications and marketing, Richard Dunkerley, said a growing focus on client-centricity may be a trigger factor.
“Advisers are becoming smarter, more efficient and more customer-centric, and to the extent that the accessibility of advice relies on a vibrant, growing advice sector, the research findings are also a positive outcome for consumers,” Mr Dunkerley said.
However, the report also found that “practice profitability dropped sharply in 2013 and remained low in 2014”, down 1 per cent to 24 per cent of revenue.
The sliding profits come as fee-for-service advice provision is on the rise – rising from 30 per cent of revenue in 2012 to 55 per cent in 2014 – and advisers take on a greater number of “active clients”, both of which are outcomes of the FOFA reforms.
Beddoes Institute director and report co-author Adam Tucker said the diminishing profits are likely to be symptomatic of the additional costs incurred due to regulatory compliance needs rather than an indication of the long-term profit outlook for fee-for-service advice.
“We are still in a transition period, albeit towards the tail end,” Dr Tucker said, adding that those advisers who focus on implementing client-centric models and raising their Net Promoter Score are likely to see enhanced profitability.
The report also found that, having reached a three-year high in 2013, the marketing spends of advice businesses dropped off in 2014, down from 2.8 per cent of revenue to 1.2 per cent.
Former NSW adviser banned following conviction
BREAKING ASIC has permanently banned a former NSW-based financial adviser follow...
Westpac brings in new ‘battle-hardened’ chairman
Westpac has appointed a successor to replace outgoing chairman Lindsay Maxsted. ...
Advice in ‘flux’: HLB Mann Judd
It’s the best of times and the worst of times for financial advisers, with ind...