Research shows that public trust in financial planners remains low. Individual efforts to fix the reputation problem are well-meaning but haven’t worked. It’s time for a collective and data-driven approach.
In a 2015 survey, only 24 per cent of Australians said they trusted financial planners. Since then, ASIC has entered into 62 enforceable undertakings (EU). Unfortunately, this small fraction of the industry – and the poor reputation they have created when it comes to trust and confidence – is having a disproportionate and unfair impact on the rest of the planning community.
Consider these stats:
- For every client who bothers to complain, 26 others remain silent;
- Assuming each EU has been based on only one complaint and this ratio is valid across all complaints, that’s over 1,600 dissatisfied clients for these advisers; and
- Given dissatisfied clients tell an average of 16 people about their poor experience, this could equate to over 25,000 negative conversations about the industry during this time.
It’s no wonder trust is so low.
It doesn’t help that the average click-through rate on headlines with negative superlatives is a staggering 63 per cent higher than that of positive ones. Bad news sells. Good news stories aren’t dramatic, so they aren’t that entertaining. How often does a conversation start with “Oh, you’ll never believe the great experience I had with X”? Add to this the fact that people are generally secretive about their finances. It’s a taboo subject.
As an individual, I’m sure you’re doing what you can to reverse this stigma. You’re probably collecting reviews or ratings from your clients to show prospective clients that they can trust you. This works at a granular level, in that it benefits your individual reputation and practice. When someone seeks an adviser, you’re putting your best foot forward (if you’re not collecting client feedback you’ve got to speak to me!).
But the perceived poor reputation of the industry means a large group of Australians, who should be seeking financial advice, aren’t. The trust and confidence has been lost. Statistically, humans need to hear of 12 positive experiences to make up for one negative one. I think we can all agree that’s not happening. So, your individual efforts to promote yourself aren’t having the impact they could, because there are fewer people seeking your services in the first place.
So, what can you do?
- Leave it to everyone else in the industry to address this trust and confidence issue; or
- Be proactive and lead the industry by capturing feedback from your clients on key relationship drivers that impact trust and confidence, and join forces to create a set of positive stories that can be used to turn this erroneous perception around at a national level.
The year-on-year increase of EUs is indicative of an industry attempting to address a real problem. But you can and need to do more; you’re in a unique position to do so at this very moment of need.
We’re running an initiative right now that aggregates and anonymises the data you collect from your clients into a macro report, to be shared in March.
It will share positive statistics about the experiences of current financial planning clients at a national and state level, which will in turn hopefully help with the wider trust issue and help provide a collective solution.
To take part in the MyNextAdvice trust and reputation initiative, register at www.mynextadvice.com.au
Simone Poulter is co-founder and head of growth at MyNextAdvice
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