In order to connect with the majority of Australians who aren’t engaged with the financial advice sector, advisers need to develop a better understanding of why consumers value their services, IOOF has said.
According to a report conducted by IOOF, titled The true value of advice, people who received financial advice were 21 per cent more likely to have greater peace of mind and 19 per cent less likely to argue with their partner.
This peace of mind, however intangible, is what many people are willing to pay for. For other people, the value lies in the tangible financial benefits as they are easier to identify and measure, IOOF said.
Group general manager for wealth management at IOOF Renato Mota said often when it comes to the discussion of fees, it’s not up to the adviser to dictate what value they are going to provide the client.
“Importantly, when the time comes for a fee discussion, clients should be left to make their own judgement on what ‘value’ is,” Mr Mota said.
“Rather than leading with the vague and intangible term ‘value’ when discussing fees, it will be more useful to provide the full list of services you offer and clearly show why your fees are a fair reflection for those services.
“If you include intangible benefits of advice, such as counselling against destructive client behaviour, as a part of your conversation with clients, it’s important to be specific on how this is a service which adds value to their portfolio.”
Mr Mota said that finding ways to reduce fees is also a critical move for opening up consumer access to the financial advice sector.
“As investors become more cautious about their spending, having a clear link between fees charged and the services which provide value will become more important,” he said.
“For some clients finding a way to offer lower fees will be crucial, but it should be remembered – cheaper financial advice doesn’t make it better, it’s just cheaper, and without value it’s still expensive.”
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