More thought needs to be given to product transparency and simplicity by financial institutions if advisers have a chance of restabilising trust with their clients, key influencers among licensees owners have concluded.
“I think we push a solution into a problem rather than the other way around,” Peita Diamantidis, managing director of Caboodle Financial Services, said while describing the shortcomings of many of the current model of financial advice offerings.
“I think the product architecture has leaned towards technical things and financial engineering, when in reality a lot of what the public needs is more about coaching, more about making progress,” Diamantidis said on the sidelines of the Professional Planner Licensee Summit in June.
Diamantidis delivered a spirited missive during on the topic of consumer-focused, goals based advice, alongside Madison Financial Group and Advice Intelligence chief executives, Annick Donat and Jacqui Henderson during the Summit.
On the sidelines Diamantidis said advisers who are product focused get sidelined by technical issues and don’t spend anywhere near enough time developing and encouraging skills to inspire people to live their lives.
Real disclosure needed
Better and easier to understand disclosure is what’s needed if advisers have a chance of winning back the trust of clients, said Hillary Ray, a partner with law firm Cowell Clarke.
“By transparency, I mean transparency around the product and the hidden aspect of products,” Ray said.
“One thing the regulator struggles with is the actual cost of advice… we still see information in the PDS [product disclosure statement] and information informing the PDS that is some very complicated pricing,” Ray highlighted.
The industry needs to move to disclosure that specifies the final cost without needing calculations, “that would go a long way to restabling trust with regulators and product issuers and advisers who recommend these products,” Ray said.