The findings of a survey into perceptions of financial advisers has given new thinking to the wealth sector.
Momentum Intelligence business development manager Michael Johnson with Momentum Media wealth editor James Mitchell.
Momentum Intelligence, Momentum’s research and market intelligence business, and ifa have conducted the first-ever client experience survey, uncovering key insights into the attitudes clients have in relation to the financial advice industry generally and their financial adviser specifically.
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.
The survey was carried out 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 Australians’ attitudes, perceptions and priorities.
The findings were significant.
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 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. This 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 of 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 that non-advice clients disengaged from their adviser
Fifty-five per cent of 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 were applying their own experiences and were potentially uninformed in how much it costs to engage an adviser.
The full results of the survey were revealed at the Client Experience Workshop events in Sydney and Melbourne in September in October 2019.
Over 500 advisers heard from leading speakers and industry professionals about how they could use the findings to better improve their relationships with clients and shape their businesses for success.