The Association of Financial Advisers has committed itself to being more positive about industry change over 2013 as new research reveals both threats and opportunities for members.
While conceding that the association has been defensive over consumer-driven industry reforms, chief executive Brad Fox said the AFA would now be on the front foot having secured “a reasonable amount of evidence to support change”.
The blueprint in question is New Frontiers: The Age of Consumers, research conducted in conjunction with Business Health and AIA, which the association released to the media yesterday (Tuesday).
Based on the views of over 12,000 people who have used a financial adviser in the past four years, the AFA white paper suggests that the majority have had a positive experience, but that there is plenty of room for improvement.
Communication and the financial-review process performed poorly while clients rated their personal interactions with advisers – business relationship, professionalism and support staff – highly.
For Fox and Terry Bell of Business Health, this represents a lost opportunity with reviews an obvious forum for advisers to impress clients.
“Periodic reviews, over and above portfolio reviews, are a great chance to get clients into the office and control the meeting, walk them around the office beforehand and introduce them to support staff,” said Bell.
Personalised, proactive communication
The research found that clients want personalised, proactive, regular communication that talks specifically to them and a review process that covers their specific life goals, not just their investments and/or policies.
“Clients were far less satisfied with many of the process-driven areas of the practices, including reviews, communication and implementation,” Fox said. “This presents advisers with a great opportunity to improve on these aspects of their service delivery.”
Fox added that the opt-in and fee-disclosure-statement requirements of FoFA make it even more compelling to act now to address these gaps.
Getting clients to see the practice as part and parcel of the advice chain also becomes vital when, as the research states, 50 per cent of clients indicate they will not stay with a practice if their adviser leaves or retires.
Another threat is mid-term clients who have been with an adviser for between three and seven years, whom the survey found were most dissatisfied.
Fox said this and the issue of communication should raise one question for advisers: what is being done to foster a closer relationship with key clients?
“There appears to be an enormous opportunity for new client acquisition from within the existing client base – 87 per cent of respondents said they would refer their adviser to friends, family and associates,” concluded the research.
However, it found that this is only actually occurring in six out of 10 cases, with the remainder unsure as to whether the adviser would want the extra business.
Or, as Bell puts it: “Clients will give you feedback. You just have to ask.”
Have they released the full report? It would be interesting to see the method they used as recent evidence shows many clients are in a poor position to comment on the quality of the advice they are getting – even if it is bad they still often say it is good.