This year has been a difficult one in many ways for financial advisers. The impact of the COVID-19 pandemic, the continuing roll-out of education, professional and ethical standards and an ever-increasing compliance burden have placed pressures and stresses on advisers and practices like never before.

Amid all of this, though, it has emerged that advisers’ satisfaction with how their licensees are supporting them and their businesses has rebounded since last year. CoreData’s 2020 Licensee Research shows that almost six in 10 (58.5 per cent) advisers rate their satisfaction with their licensee as a seven or higher on a scale from zero to 10 – where zero means completely dissatisfied and 10 means totally satisfied.

This figure has bounced back from 52.6 per cent in 2019, after it fell sharply from 70.5 per cent in 2018. Gains in satisfaction have been achieved across 11 of the 12 service elements examined in the research. The notable exception is adviser technology, where advisers’ satisfaction with their licensee’s support is lower in 2020 than it was in 2019, having already been judged lower in 2019 than in 2018.

The 2020 research shows that only 45 per cent of advisers rate their satisfaction with technology a seven or higher. To put that in perspective, satisfaction was lower only with their licensee’s marketing, business planning and merger and acquisition support.

Technology might seem like a dry subject, because in many respects it is; but it facilitates so much of an advice practice’s efficiency and ability to serve clients that whether you like it or not, it’s an issue advisers and advice firms have to grapple with. CoreData’s research suggests strongly that they could do with better support from their licensees, and that it presents issues for advisers and licensees alike.

Which of the following factors, if delivered exceptionally by another licensee, would make you consider switching to that licensee (or handing back your own AFSL)?

Licensees facing risks

Low satisfaction with adviser technology exposes licensees to a potential risk. Failing to satisfy advisers is never a good thing, on any service element, at any time. But it turns out if another licensee were to suddenly appear that could really deliver what advisers want from their technology (or if an existing licensee really got its act together), it’s something that would make advisers consider switching.

We know this because when we asked advisers “which of the following factors, if delivered exceptionally by another licensee, would make you consider switching to that licensee (or handing back your own AFSL)?”, adviser technology was ranked second.

Around four in 10 (42.4 per cent) advisers said they’d consider switching in pursuit of better adviser technology – more than said they would switch for better technical services, product independence and choice and investment research.

(Only compliance support is a factor more likely to make advisers consider switching. In 2020 that result was driven by a high level of dissatisfaction among advisers in institutionally branded licensees. More than two-thirds of them said if another license could offer them better support on compliance, they’d consider switching.)

More than meets the eye

As with all of the measures in the Licensee Research, satisfaction ratings aren’t based on just one question. The research derives an overall adviser technology satisfaction score from five underlying issues:

  • How adviser technology improves overall advice business efficiency,
  • How adviser technology supports advisers to meet licensee standards,
  • How effectively a licensee’s training helps advisers get the most out of technology,
  • How well the help-desk supports advisers in resolving issues when they arise, and
  • How well a licensee keeps advisers informed about its long-term strategy for technology.

To a certain extent an adviser’s satisfaction with technology depends on the product or the vendor, not just the licensee. If a vendor is unresponsive to or unwilling to support advisers, that’s not necessarily within a licensee’s power to control. But it’s arguable that if a licensee mandates the use of specific technology they have a responsibility to make sure it does what it needs to do, effectively and efficiently, without advisers having to spend untold hours and dollars customising an installation or sitting on hold to a help desk to solve problems.

The Licensee Research also tells us the fees advisers pay to their licensees increased again in 2020. This is understandable in an environment where subsidies are dwindling and licensees need to charge more to cover the true cost to serve advisers. But it means that licensee offers are under intense scrutiny from advisers, and licensees are under pressure to justify current fee levels and future increases.

Any weak links in a licensee offer are more likely to be exposed at a time when advisers are questioning the value they get from their licensee. The Licensee Research exposes some of those weak links and empowers licensees to take action to make life better for advisers – before it’s too late.

Simon Hoyle is head of market insight for CoreData Research.
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