Three pieces of high-quality research, all released this week, highlight the massive divide that exists in people’s perceptions of financial planners, and the enormous challenge that financial planning still faces to be taken seriously as a profession in this country.
On the one hand we saw the release of the Lifeplan Financial Advice Satisfaction Index, which is at its highest level since inception in 2007.
On the other hand, CoreData’s Advisory Group of the Year research revealed that clients’ satisfaction has fallen to its lowest level in five years.
What’s going on?
The key difference, it seems, is in the samples of both surveys, and in those differences we see the crux of the problem the financial planning industry continues to grapple with.
Lifeplan’s survey measures existing clients’ satisfaction with their financial planner. They’ve got a relationship, and they’ve experienced what it can do.
CoreData measures the satisfaction of consumers who are “in the market for financial advice” – or, in other words, prospects. Even though they say they are looking to establish a relationship with a planner, their impressions of financial planners are still informed largely by what they see and hear.
These findings represent a variation on the old saying: “All financial planners are dodgy, except for mine.” Consumers seem to know that they could benefit from financial planning services, yet remain wary of financial planners and how they operate. But once they’ve experienced what good financial planners can do, they love the experience.
That’s all well and good, except the road blocks to new clients seeking out financial planning services are real, and a real worry.
This week (it’s been a big week for research), the consumer advocacy group CHOICE released figures showing that 81 per cent of consumers are concerned about the proposed amendments to the Future of Financial Advice (FoFA) laws. That’s a very big turn-off – and it’s an issue that financial planners have to deal with in the first client meetings. Those preconceptions have to be addressed and laid to rest. Only then can the substantive discussion take place. It’s more difficult to convert a prospect to a client when that client’s starting belief is that they’re going to be ripped off or misled.
These various research findings also confirm another dichotomy in the financial planning industry: the disconnect between financial planners wanting to be perceived as professionals and therefore as being trustworthy; and the understanding of what it really takes to be a professional and the willingness to do it.
The professionalism of financial planners is currently being cultivated one client at a time, in one-off interactions between individual planners and individual clients. But that’s a slow, bottom-up process.
Creating an actual, recognised profession needs more of a top-down approach, but that is less well understood and even less well executed.
It’s a top-down approach because it sets high-level standards of behaviour and practice, which can be easily and simply communicated to the community. But even though it’s a top-down approach, it needs every single financial planner to consciously commit to it. They have to accept and conform to a set of standards deemed appropriate by their peers (and policed and enforced by their peers), they have to acknowledge that their first duty is to the public interest, then to their individual clients’ interests, and only then to their own. And they need to not only manage or disclose conflicts of interest, they need actively to avoid them.
These are the kinds of extremely powerful messages that a profession sends to the community, and they address the issues identified by both CHOICE and CoreData.
A commitment to professionalism – and actually delivering on that commitment – creates an environment where consumers can begin to approach financial planners from a position of respect and trust, rather than wariness and mistrust.
Once that road block is removed, the natural, innate qualities of the best financial planners do the rest.
