Eighteen months ago a new website, Adviser Ratings, was launched. Every authorised financial planner listed on ASIC’s new register has since been uploaded to the site.
But unlike the ASIC website, each adviser on Adviser Ratings is rated by the site. The public can also comment on their performance. Many planners were believed to be distressed.
“I had mixed feelings when I saw my name on Adviser Ratings,” says Anne Graham, managing director of Melbourne-based McPhail HLG Financial Planning.
“I wasn’t really sure about who was behind the service, what their motives were, and what control the adviser had.”
Like the hotel and restaurant industry, advisers were now subjected to TripAdvisor-like scrutiny. The advent of ratings sites raises serious questions about issues like ratings methodology and defamation, and some are calling for regulation of the sites. But while some advisers might not like it, and with regulation unlikely, rating sites will become a fact of life for financial planners, as they have in other industries and other countries where planners are rated.
Download the full April 2016 Cover Story, “Source of truth”, as a PDF
Advisers need to adapt to the new environment. They need to become mindful of their online reputation as part of their marketing strategy, and even look to exploit the potential of these sites to generate leads.
Superior client service
But ultimately the best way for advisers to protect their reputation, both online and offline, remains the same: superior client service.
“The only thing a financial planner can do is concentrate on the client,” says the Financial Planning Association’s (FPA’s) chief executive officer, Dante De Gori.
The wave of financial planning scandals in recent years triggered a range of responses from regulators and the industry itself. But a broad consensus emerged that Australians faced an information void: they didn’t have enough information to find a licensed and ethical financial planner.
There have been two responses to the void: the creation of official registers by regulators and industry bodies; and the appearance of private players who also saw a chance to rate financial planners publicly with the aim of helping people choose an adviser, but to also make a profit.
Following the introduction of the Future of Financial Advice (FoFA) reforms, the Australian Securities and Investments Commission (ASIC) established a financial advisers register (FAR), which was launched on March 31 last year.
A senior executive leader at ASIC, financial adviser Louise Macaulay, says the legislation-driven register’s goal is to give consumers knowledge about who the properly authorised advisers are, as well as provide transparency and information to the broader industry and ASIC as a regulator.
Macaulay says that before the register there was no information on who was providing advice under Australian Financial Services Licences (AFSLs) across Australia, including employed representatives.
There have been over 600,000 searches of the register on ASIC’s MoneySmart website from the launch date to January 20, 2016.
Transition to a profession
Macaulay says the site has been successful and is an important change in the transition of financial planning to a professionalised industry.
“We have had very strong feedback from industry,” she says. “And we’ve had a huge number of hits on it.”
Industry bodies have also been rolling out registers. The FPA has launched its online “Find a Planner” tool which allows people to find an FPA member in their area.The FPA’s De Gori says that FPA membership itself provides a screen or selection criteria to help people find a good planner and will help build consumer trust and confidence.
But while ASIC and the likes of the FPA provide inherent elements of screening, they don’t provide any qualitative measures of planner performance. That’s where private players are stepping in and providing sites that rate planners and allow clients to comment on their performance.
Some larger players have combined the ability to search for advisers with customer feedback. BT Financial Group launched its Adviser View in October 2014, which allows people to find an adviser within the Westpac Group, but to also rate their experience. Mark Spiers, general manager of advice at BT Financial Group, says the site has had 140,000 unique visitors since its launch, with 4000 customers sharing their personal experience of consulting a financial adviser.
Around a third of visitors have searched for an adviser by location and another third have searched the profile of a particular adviser. “The take up of Adviser View has been phenomenal both as a tool for customers searching for the right adviser and for advisers being able to demonstrate their expertise and the value they add, through the voice of their customers,” he says.
Spiers says the site has generated “overwhelmingly positive feedback”. Adviser ratings average 4.89 stars out of five across five advice dimensions.
A “source of truth”
BT says it wants to reflect “all customer feedback and build a source of truth for customers seeking financial advice”. Spiers says only 37 reports of negative experiences have been received.
The most high profile privately owned ratings site is Adviser Ratings, which was launched in October 2014 by finance executive Angus Woods, who spent 20 years in financial services and consumer businesses and was an executive of Macquarie Bank and chief financial officer of Virgin Money.
Woods has teamed up with Christopher Zinn, a long-time journalist and consumer affairs campaigner. High-profile Sunrise presenter and finance journalist David Koch is also an investor and adviser.
Woods says he witnessed the damage done by bad planners during the global financial crisis.
“Some of my parents’ friends who were retired lost 80 to 90 per cent of their wealth and had to go back to work,” he says.
He launched Adviser Ratings to help consumers find a good planner but also “identify and shine a spotlight on those individuals that did provide good advice”. Ratings sites in the UK and US also inspired Woods.
The site went live and 23,000 advisers on the ASIC register are now profiled on the website, which has raised some eyebrows. ASIC’s Macaulay says the regulator’s planner register is freely available at the data.gov.au website and anyone can bulk download the data, which Adviser Ratings has.
Macaulay says apart from that ASIC has no role in ratings sites. “They’re done by various entities for commercial reasons,” she says.
“Some people obviously think there is a commercial need for them in the market.”
But planners like Anne Graham were surprised to see their names on the site. Some asked to be removed. Woods says just 100 out of the 23,000 advisers have requested to be removed. Adviser Ratings obliged, but Woods says that could change.
“We’re getting advice on that,” he says, adding that some legal advice suggests they don’t have an obligation to remove adviser names.
The risk of reputational damage
The Beddoes Institute’s Dr Rebecca Sheils (pictured), a trained psychologist, says reputational damage is a significant issue.
“There is a person behind those ratings. We can’t lose sight of that. I have some concerns around the potential impact of ratings when [the subjects] potentially have no control over it.”
The Beddoes Institute itself has launched an adviser ratings site, Most Trusted Adviser, which selects high-performing advisers who undertake the Beddoes’ client experience survey.
De Gori says reputational damage is also a concern for him. “You want to ensure you don’t enable campaigns to be run against a particular individual,” he says, adding sites can’t be used to discredit or ruin someone’s reputation or business with no truth and no grounds to do so.
To avoid manipulation of ratings and comments, Woods says Adviser Ratings abides by all the recommendations the ACCC set down as a guide to managing review platforms.
It also has a rigorous auditing process. Every review is audited and all customers are contacted to ensure the review is valid. The site has automated processes so it knows which IP address or device is submitting the review and Adviser Ratings checks that against the IP addresses in their database.
Woods says the site also has automated tools that monitor the tone and style of each review and compares them to other reviews.
The UK experienceAdviser Ratings founder Angus Woods says the service has generated more than one thousand leads through the platform. But online leads can be a mixed blessing based on overseas experience. Alan Dick is a Glasgow-based adviser serving clients across Scotland. He is a Certified Financial Planner and chair of the Chartered Institute for Securities and Investments’ (CISI) financial planning professional forum. CISI is the UK’s body representing finance and investment professionals. Dick says the leading adviser ratings site in the UK, vouchedfor.co.uk, “I can only speak for my own experience and that of a limited number of friends that I speak to regularly,” he says. “Personally I have found it almost impossible to leverage quality leads. The system either generates lots of time-wasting enquiries that will never be suitable for our client proposition or filters everyone out so we get virtually no leads at all.” Dick does say the ratings sites have probably added to industry transparency and had some effect on improving planner performance. “I don’t have any evidence either way, but I think it might be having a slight positive effect but it’s difficult to say for sure,” he says. |
This is an edited version of the cover story in the April 2016 edition of Professional Planner
