Wade Matterson believes that while advice is important, the typical advice process is hampered by a “huge disconnect” in the way trust is garnered.
Matterson, an actuary and practice leader at consultancy firm Milliman, revealed his own experience in seeking advice to the audience at the Conexus Financial Retirement Conference in Sydney.
“The problem I had with the process was that each step was so difficult, and there was so much friction,” Matterson said. “The worst thing that someone did was giving us a fact find – my wife’s an accountant and it took her a month to get all the information together. Why do they ask us all these facts about ourselves when they haven’t asked us what we want?”
Matterson asked the audience: if life is about expectations, isn’t advice about the business of managing those expectations?
The disconnect Matterson sees is that advice can’t take clients from A to B if neither of them have a clear idea of what that goal looks like. He says that when he and his wife were eventually asked what they wanted out of life, they “didn’t know what B was”.
The answer to this kind of disconnect, he said, is data. Information can help set a benchmark for where clients might want to be, which they can then refine with the help of their financial adviser.
“Data tells us ‘we know what you’re doing, but this is what people like you are doing in five to 10 years from now’,” Matterson explained.
Matterson used some of the research completed at Milliman to illustrate the point.
“For example, one thing data tells you is that you have to maintain your social circle, because if you don’t [then] your social activity will decline, because that’s the natural tendency,” he said. “Data gives you a better approximation of what that point B is.”
For advisers, the power of data is that it helps narrow down the range of what point B might look like, Matterson explained.
“Without the power of data, I might as well be throwing stuff against the wall and seeing what sticks.”
