Clients telling their stories in their own words will be a prominent feature next year, as the financial planning profession addresses persistent misconceptions and promotes the value of advice directly to consumers. Simon Hoyle reports.
During 2014, the Association of Financial Advisers (AFA) and the Financial Planning Association of Australia (FPA) will separately take their financial planning message to the masses.
Using consumers’ own experiences and putting consumers’ own voices to their stories, the campaigns are designed to lend authenticity to the messages and to dispel lingering scepticism around the profession – scepticism not helped in recent months by the inability of the Commonwealth Bank to appropriately address significant failures in its wholly-owned advice business.
The aim of both the FPA and the AFA is to increase the number of consumers who have an ongoing relationship with a financial planner. Whether the current penetration rate really is only one in five, as claimed, is really a moot point. The objective of the campaigns is to increase the number.
There is already evidence of latent demand for financial planning services, with the FPA claiming about 20,000 hits each month on its “Find a Planner” website, and the AFA claiming an overwhelming early response to calls for candidates for its fledgling “Your Best Interests” program.
CONSUMER REACTION
It is unclear what consumer groups make of the push by the financial planning profession to tell its stories. The consumer advocacy group Choice declined to be interviewed for this article.
If the AFA, the FPA and others succeed in generating a significant influx of new clients to the profession, it raises some longer-term questions about how the existing profession and supporting infrastructure might cope. But that would be, for a change, a welcome problem.
Brad Fox, chief executive officer of the AFA, says the association’s campaign can be summed up in one line: “It’s ‘great advice for more Australians’.”
“It’s about growing the market for advice,” Fox says.
“The research that we did shows that only two in 10 Australians have an ongoing advice relationship. I know there’s other figures around, that more people than that seek advice, but the ongoing advice is where we’ve demonstrated the greatest value occurs to the client.”
Fox says the aim of the campaign is to raise the figure to “better than two in 10”.
“We could say ‘four in 10 within three years’ – but that would double the size of the industry in three years, and we wouldn’t have the advisers and the infrastructure to go round,” he says.
“So let’s just say we’ll go for ‘significant growth’ – an amount that can be determined as being much better than previous.”
BREAKOUT: A SMALL SLICE OF A SHRINKING PIE
EFFECTIVE ENGAGEMENT
Mark Rantall, chief executive officer of the FPA, says an important part of effective consumer engagement is helping consumers understand the significance of their financial planner being a professional and being part of a professional association. That thinking lay behind the FPA inviting clients to its inaugural FPA Professionals Congress in Sydney in October.
“One would hope that we would be able to add value, firstly, to the relationship [a member] would have with their client,” Rantall says.
He says the congress showed clients that their planner was “part of something that is a profession, is run professionally, has high standards and opens it up to them to experience what their financial planner does to invest in themselves for their education”.
Rantall says the FPA launched a new consumer website in early November, “specifically designed so people can go in and get information and then ask questions that they might need answered, and also find a financial planner”.
“We’re averaging 20,000 hits a month by consumers into ‘Find a Financial Planner’,” he says.
“People are really interested, and are having a look around, but whether that triggers them into action is the critical thing. It’s a bit like looking for a gym or a personal trainer. You think about it for a long time and you do some work and you investigate and you do some searches. Making that first appointment and going to the gym and putting it into action is the hard part.
“So we’re doing that; and we also have an ongoing consumer advertising campaign, which will be reinvigorated next year around clients telling their story about seeing a financial planner and what that’s done for them, together with our normal consumer touch points.
“All this is designed to try to get to consumers and tell the story.”
Fox argues that the AFA is “this hub within a wheel that attaches all these stakeholders in financial advice”.
“That is, the adviser, primarily; but then the licensee; the product and service providers; regulator and government; and the consumer,” he says.
“‘Your Best Interests’ joins all of those together in a shared win, if we’re successful. It addresses underinsurance. It addresses the undersaving issue. It addresses an ageing population. It addresses the reliance on government funding for aged care, if we’ve got a better-saved and better-prepared population. At a high level, everybody wins. Obviously, if more people seek advice, there would be more advice provided, more money earned from advice, more product usage as well.
All the pieces of the value chain win.”
LEADING THE WAY
Fox says the catalyst for bringing together all the different stakeholders was someone willing to raise their hand and say, “we will lead”.
“That’s what we’ve done,” he says.
“The very pleasing thing is that we’ve had support from all quarters. Now, for some individual organisations, it won’t necessarily be good for them to participate in a significant way, because of their own communications strategies; but the overwhelming feedback so far has been exceptional.”
Fox says the financial planning profession has been on notice for the past three years that the current government – then the opposition – believed it was the job of advisers themselves to tell the story of the value of advice.
“They support markets that operate freely, and that means it’s up to us to do the job,” Fox says.
“Having said that, they’ve seen what we’re doing and are supportive of it. ASIC [the Australian Securities and Investments Commission] are aware of what we’re doing, and notionally are supportive of it. Advisers certainly are.
“It’s been terrific. And the licensee space also very much are wanting to be involved.
“The key message is about the value of advice. That’s a very simple thing to say, but the big challenge in this isn’t telling people the value of advice, it’s showing them in a way that they can engage with and feel. We know that all the studies into how humans make decisions always stem from an emotional reaction in the brain before there’s a rationalisation and then a physical action to support it. What we need to do is attach with the public at an emotional level.
“If we put advisers up telling the story of advice, it’s not going to be as effective as having consumers telling the story of the value of advice. It takes the perceived bias away from the message.”
TRIGGER POINTS
Fox says the industry is well aware of the biases held by the eight in 10 people who do not presently have an ongoing advice relationship, and it’s those it needs to address by presenting case studies of people who have reached or who are approaching a so-called “trigger point” in their lives.
It is hoped that an emotional attachment will be established between these individuals, and viewers of the “Your Best Interests” program, and that viewers will follow the example of the case studies and go on to seek out a financial planner.
Typical trigger points include pregnancy, an inheritance, buying a first home, or illness (either of self or a close family member) – what Fox calls a “life-defining moment”.
“One of the messages we need to get across is recognising the triggers,” Fox says.
“We’re looking for people that are approaching those triggers, who are at the early point of recognising those life-defining moments, and taking them to get advice. This is someone living it, going through it – the real emotion of it.”
Fox says the AFA has launched a campaign to attract potential candidates and “we’ve got some amazing storylines coming through already”.
Rantall says the FPA is keen to “demystify financial planning for the general public”.
The aim of inviting them to the congress in October was for them to “come and [learn], firstly, about markets and global direction of financial markets today – so there was an educative component to it”, he says.
“And secondly, coming to the opening plenary session with [Victoria Cross and Medal for Gallantry recipient] Benjamin Roberts-Smith, which was an uplifting story about courage, leadership and management.
“And then being able to come into our trade display area, so they could see, feel and touch all the relevant areas that they might deal with as an investor.”
Rantall says any member who was registered to attend the congress was free to invite a client, subject to a cap on numbers for practical reasons. It was the first time clients had been invited to an event of this type, and it attracted about 50 of them. The FPA plans to repeat the exercise at next year’s congress in November, and expects numbers to grow.
“One of the really good things was we had Sam Henderson from Sky Business News there, and he set up an interview area downstairs in the trade display and we took a number of clients down to be interviewed by Sam,” Rantall says.
“They’ll be screening over a number of months on Sam’s program. We also had clients of financial planners who spoke at the second plenary with [ABC reporter] Emma Alberici, and they came down and did interviews as well.
“It was great, from a couple of points of view. It was great for the clients to see what we actually do, but it was also great for financial planners to hear from clients the value that [a] financial planner adds to the client relationship, in their own words.
ADDRESSING MISCONCEPTIONS
“Sometimes we’re so busy in our daily lives, doing the work we normally do, [that] we don’t take the time to stop and sit down and have a discussion around what works for you as a client, in the work we do for you, and why do you use us – and what are the lessons we could learn from dealing with you, and how we could deal with you in a better way.”
Rantall says the congress is just the latest piece in a bigger consumer engagement jigsaw for the FPA, which includes websites, referral services, advertising, and direct-to-consumer elements.
“In February of each year we’re going to run the ‘Ask an Expert’ program, which is a pro bono exercise done with financial planners for clients,” Rantall says.
“Then we have Financial Planning Week in August, a full week of client engagement seminars, pro-bono work – ‘Ask an Expert’ runs through that as well – and advertising. And then we’ll also proceed with a client engagement piece at our congress in Adelaide on 20th and 21st of November next year.
“It’s a way that we want to tell the stories that clients have, and how financial planners have helped them. It’s a way of rolling that out to the general public. There’s a bit of a misconception in the general public through what they have seen and heard in the media. So to get our story out about the great work that the vast majority of financial planners do for their clients – in the clients’ own words – I think is really important.”
Rantall says key misconceptions about financial planners persist – that they are there to sell a product that may not necessarily be in the client’s best interests, that they’re interested only in taking commissions, and that they are not necessarily giving people the right advice.
“That perception has come out of a few things: the global financial crisis has certainly had an impact, even though that is absolutely not the financial planners’ fault; [and] the knock-on effect to financial planners if people have lost money and acted precipitously and withdrawn from markets,” he says.
“I think advice collapses like Storm [and] Opes Prime, and product collapses like Trio and Westpoint and Basis Capital, have all served to create that perfect storm at a given point in time.
“The vast majority of clients have not been affected in that way and are very happy with their financial planner – there are 16,000 financial planners in the country doing a great job for circa five million clients – so what this is about is making sure if there are one in five Australians getting advice today, that we get closer to five out of five getting advice from professionally qualified financial planners.”
