Exactly what nuggets of wisdom Mickey Arthur was hoping to extract when he controversially tasked the Australian cricket team with self-reflection ahead of the third test remains a mystery. Certainly Australia’s heavy defeat at Hyderabad, which left them trailing 2–0 in the series, required a response but expecting players to provide the answers in a series of questionnaires or presentations appears optimistic.
If nothing else the sorry saga raises some interesting questions about communication and the value of the feedback process. What then to make of New Frontiers: The Age of Consumers, research conducted by the Association of Financial Advisers in conjunction with Business Health and AIA?
Brad Fox, chief executive of the AFA, will rightly argue that it is entirely appropriate that his association support members and the broader advice market with evidence-based research. He will point to the benefits that practices and advisers could potentially derive from this information. And with a sample size of over 12,000 active clients and reputable research partners, it is easy to be swayed by a line from the report: “The importance of regularly seeking feedback from clients can never be overestimated”.
The struggle for advice
However, in May last year no lesser authority than the Australian Securities and Investments Commission (ASIC) concluded that consumers struggle to differentiate between good quality and poor quality advice.
Part of the regulator’s shadow-shopping survey was a 60-minute interview with each of the shadow shoppers after they had received advice and reported back to ASIC. Of the shoppers interviewed, 86 per cent rated the advice they had received as “good” but ASIC rated only 3 per cent of plans produced as “good”.
This suggests that consumers struggle to objectively rate the advice they receive and, as a result, assess quality according to “soft” issues. These include the apparent trustworthiness of the adviser and whether the adviser asks them what appear to be the right questions.
The point is reinforced by the AFA research, which found that clients rated people attributes or what it called the “relational” areas of the business highest. This includes their business and personal relationship with the adviser and support staff.
The Business Health’s findings underpinning the research has clients giving their advisers a collective 4.23 out of 5 across a range of areas. Business relationships topped the list with 4.46 out of 5 followed by professionalism of business practice and standard of support staff. Communication, range of financial services and financial review process performed worst, with the latter receiving the lowest score of 3.95 out of 4.
Very satisfactory scores on the surface, but do they paint an accurate picture of how good the advice is and will the regulator share the AFA’s optimism?
