New research has revealed that while just over half of financial advisers believe their clients understand their advisory fees, less than one third of investors actually do so, which has led to clients mistrusting the industry.
The Price of Financial Advice report, released last week by State Street Global Advisors' SPDR ETF business, suggests that “many financial advisers are still falling short when it comes to helping their clients understand the real value of the services they can provide”.
The research found that while 53 per cent of financial advisers believe their clients understand their fees, only 33 per cent of investors actually do.
Further, 92 per cent of financial advisers say they have discussed fees with their clients, yet only 67 per cent of investors agree, the report said.
“What we learned is that investors want to have open and honest relationships with their financial advisers, and they want to trust them. But, investor confusion about fees is getting in the way,” State Street Global said.
Having a clear understanding of advisory fees was seen as important, the report noted, while charging low fees was the least important factor for investors when choosing a financial adviser.
“Investors don’t mind paying for financial advice. They’re not just looking for the lowest price. They just want a clear understanding of what they’re paying and what they’re getting in return,” the report said.
The research found that 60 per cent of investors who understand the fees they are charged referred a friend or family member to their adviser, while only 42 per cent of those who did not understand the fees did the same.
“Investors who do not understand what they’re paying trust financial advisers less and are less likely to refer them to others. This is a significant problem in a post-financial crisis world where financial advisers are looking to rebuild trust and regain loyalty,” the report said.
Comments powered by CComment
Is the new class of “qualified adviser” nothing more than a plucked chicken?
There’s a brief story relayed in ...
Minister Jones has backed a two-tiered advice system and the introduction of a “qualified adviser” designation for ...
The Finance Brokers Association of Australia (FBAA) has slammed the government’s willingness to welcome banks back into ...
Never miss the stories that impact the industry.
Get the latest news! Subscribe to the ifa bulletin