New research by Zurich found nearly half of advisers believe it is up to them to improve consumer financial literacy, which could then improve the reputation of the advice profession, while others say it is a shared responsibility.
A survey, conducted by Lewers Research on behalf of Zurich, showed that 93.4 per cent of advisers believed financially literate consumers are more likely to “understand, value, and accept” financial advice.
About 87 per cent of those advisers also believed improved consumer financial literacy would directly and positively impact the reputation of the advice profession.
When asked who would primarily be responsible for improving literacy, nearly half of respondents (49.8 per cent) said advisers themselves. About 46.3 per cent said the responsibility should be shared between advisers and life insurers while 1.3 per cent said it should fall to the government.
Zurich’s head of distribution for life and investments, Kristine Brooks, said these findings show the importance of making sure clients are financially savvy.
“Rather than encouraging people to self-serve, high levels of financial literacy can actually help reinforce clients’ appreciation of the value of advice, encourage deeper relationships, and increase loyalty and advocacy for their own adviser and for the advice profession generally,” she said.
Further, the research found that 56.4 per cent of advisers believed consumers are more likely to trust and pay attention to messages from relatives, friends and colleagues, rather than from institutions (4 per cent) or professional associations (3 per cent).
“In this context, the research is telling us that the best and most effective people to promote financial advice are existing advice customers, and the more financially educated they are, the more likely they are to be advice advocates,” Ms Brooks said.
“It does invite the question whether, in our quest to see more Australians access quality financial advice, we should be doing more to leverage the advocacy of the 20 per cent who already use an adviser, rather than focusing primarily on the 80 per cent who don’t.
“It can be argued that, based on these findings, our industry should devote an equal amount of effort to making advocates of existing customers by helping them better understand the advice and underlying product solutions recommended to them,” she said.
When it comes to ways to improve financial literacy, the research showed that only one third of advisers are using multimedia educational resources, such as online tools, apps, and videos, with their clients.
“Tapping into the power of video and other interactive educational resources can create a more engaging and contemporary client experience and is also more likely to improve the effectiveness of adviser efforts to impart their knowledge and wisdom”, said Ms Brooks.
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