The 2019 Client Experience Survey was conducted throughout May and June 2019. In total, over 1,600 responses were received throughout the collection period with a data validation process resulting in usable samples of 1,008 advice clients and 311 non-advice clients.
ifa and Momentum Intelligence carried out the survey to help bring a client-centric focus back to financial advice and to highlight the opportunities for financial advisers in the market today by uncovering their attitudes, perceptions and priorities for Australians.
Part one: Advice clients
The survey explored the experiences of 1,008 Australians who currently engage a financial adviser. It outlined the measurements of the relationship between advisers and their clients, provided insights into how advisers could grow their advice businesses by better understanding advice clients, and outlined the expectation gaps of fees and services in the adviser offering.
Satisfaction levels are high but loyalty isn’t widespread
Ninety-four per cent of advice clients said they were satisfied with their financial adviser. However, 53 per cent of advice clients said they don’t have a definitive loyalty to their adviser. There was also a weak link between greater rates of loyalty and longer relationships, and was particularly prevalent when the advice/client relationship was greater than 10 years.
Half of all advice clients don’t know what their fees are for
Around 50 per cent of advice clients have gaps in clarity on what their fees are paying for. Half of all advice clients surveyed said they “always” know what their fees are paying for, while the remaining 50 per cent have various levels of knowledge gaps around what their adviser fees can be attributed to, with 35 per cent knowing “most of the time”, 3 per cent “about half the time”, 8 per cent “sometimes” and 3 per cent “never”.
The royal commission has dented client perceptions of the industry but not so much on their adviser
Three-quarters of advice clients said their perception of the financial planning industry have been impacted by the Hayne royal commission. However, only 28 per cent of advice clients said their perceptions of their adviser have been impacted by the royal commission.
Part two: Non-advice clients
The survey also explored the attitudes, perceptions and priorities of 311 Australians who do not currently engage a financial adviser. It uncovered the sentiments of non-advice clients towards their finances including their level of financial comfort. Those sentiments were then contrasted with the non-advice clients’ attitudes towards advice, including how well they understood the services of a financial adviser.
Most non-advice clients don’t completely understand the services advisers offer
Seventy-one per cent of non-advice clients had gaps in understanding what services advisers offer. Further, 56 per cent of non-advice clients agreed with the statement, “I am not sure how a financial adviser could help me”.
High cost was a major reason non-advice clients disengaged from their adviser
Fifty-five per cent non-advice clients who previously had an adviser quoted “cost” as the reason for ceasing the engagement. Other reasons cited included the performance of investment/financial products (38 per cent), communication skills (18 per cent) and technical skills (18 per cent).
In addition, 44 per cent of non-advice clients agreed with the statement “I cannot afford the cost of a financial adviser”. However, the survey noted that the statement is contextual and respondents were not provided a cost to evaluate, which means that they are applying their own experiences and are potentially uninformed in how much it costs to engage an adviser.
Australia’s population is 25 million and the best this survey could get was 1600. Even if only 10% of the population seek out financial advice that’s 2.5 million, yet only 1300 advice clients spoke up.
The fact that amongst those who did respond, there is a 94 % satisfaction rating has got to tell those fools in parliament that it is not the adviser at fault here, but the big end of town that politicians cosy up to for donations and electoral favours. Even the Hayne royal commission proved that!
But the big end just sells up and walks away, while those doing the job are lambasted as being evil.
This is just more proof that there is no need for FASEA.
It’s a smokescreen to cover up political incorrectness and failure!
It’s understandable really. Product providers (all of them) and the Government see us as the enemy. So they attack us to reduce our effectiveness.
Why do they see us as the enemy? Money.
We tell our clients to use funds that are better suited to them at a lower cost. So we take revenue away from bad funds and that cost providers money.
We help our clients reduce tax by saving for retirement tax effectively and also help them maximise Centrelink benefits. That costs the Government money.
Both those groups know what we do and how we help clients (at the expense of Gov and product providers) so they work together to reduce our effectiveness.
Our clients that we help know how much we do for them and 94% of the people that pay us fees are satisfied with what they pay us for.
Imagine the cost to the conflicted Gov and product providers if they didn’t try and reduce our effectiveness.
Well done advisers.
An actual survey of clients, and it appears to have been a fair sampling size. Sorry, there is no way our pollies and ASIC will pay any attention to this…There is no Bias.
Agree Ben – I’m a bit sick or Pollies and ASIC making statements on behalf of clients and or the public without the consent of those groups, nor with any accuracy. Even when you look at the numbers of genuine complaints presented to AFCA, it is relatively small. People are not lining up to complain about their Adviser it just isn’t happening even with plenty of bad press and encouragement from external noise makers like ASIC and choice. Perhaps if practitioners were allowed the scope to respond to the market more readily then engagement by the public would be higher and deeper, but an overzealous and misguided regulator just isn’t allowing that kind of innovation so the antiquated delivery of advice via an SOA will continue and people will just turn away
Our industry and particularly AFA and FPA has themselves to blame for the lack of education in the community. In any other product or service, such a high satisfaction rating would organically lead to more people seeking the product/service and a positive community reputation. It is absolutely bizarre that this has not driven positive sentiment or enormous demand for services. The non-advised think we are all a bunch of crooks and the advised are satisfied, of course the advice community knows this already, but it doesn’t matter. Being demonised daily in the media, expedient politicians and impotent associations is the cause for this unfortunate situation where we have valued and appreciated services, yet the conventional wisdom is the antithesis of this.The AFA and FPA need to get off their butts and do better. They will no doubt point to all the campaigns they are doing and give themselves an enormous pat on the back like they always do for all the awesome things they have apparently done for us, but its not cutting through to the non-advised. Ultimately it doesn’t matter what they are doing, the results just aren’t there for their members. I look forward to the day when a client calls me because of a great campaign they saw about financial advice online or on TV from one of our associations, has never happened.
A 94% satisfaction rating! What a great result considering the barrage of abuse we have suffered from ASIC, the media and those who consider us competitors. There is no other profession with such a high satisfaction rating, and the result is consistent with other surveys over many years. It’s a pity Kenneth Hayne didn’t gather this sort of information before he burnt us at the stake. I hope the FPA and AFA are sending these results to Canberra, express!