At the end of last year we reported how the latest round of research we’d conducted into financial adviser sentiment showed advisers believed the future was brighter for themselves, their businesses and their industry then than at any time in the past two years.
Now, we can add to this stock of positive news the revelation that at the end of 2021, CoreData’s index of trust in financial advice stood at 51, the highest it’s been since before the Royal Commission into Banking, Superannuation and Financial Services back in the second quarter of 2018.
The first two points on the chart above show public trust in financial advice before the Royal Commission held its public hearings into financial advice, and how it plunged immediately afterwards. From Q3 2018 and until Q4 2021 the index only reached a value of 50 on two occasions, in Q2 and Q3 of 2020.
The latest index figure is barely above this level, but in the current environment it’s a far more noteworthy result than a decline. Just what factors have come together to drive both adviser sentiment and consumer trust to these levels are difficult to isolate. We’re not living in normal times, and we haven’t been for a while.
We speculated in relation to the issue of adviser sentiment that perhaps this was partly the point. As we roll into our third year of COVID-related restrictions (some mandated, some self-imposed), economic and employment uncertainty and the increasing stress we see the health system under, maybe this is just what normal looks like now, and we’ve assimilated the disruption and dislocation to such a degree that it’s all just background noise.
And of course, we have the ongoing issue of the incredible shrinking advice industry as advisers who are, if not happily then certainly diligently, working their way through new education, professional and ethical standards. These advisers may see a brighter future for a smaller but more professional cohort (and greater demand for their advice services) on the other side of all that.
On the issue of trust, not all financial services have experienced the same movements, so we can’t say that financial advice has necessarily been buoyed by a generally rising tide. Of the financial services sectors we track trust in most closely, advice, banking and mortgage broking are at highs, while superannuation (overall), retail super funds, industry super funds and life insurance are still below their post-royal commission peaks.
What we do know, though, is that there are a few factors that crop up consistently when we ask clients to tell us that financial advisers do that makes clients trust them.
The list has not changed significantly from a year or so ago, when it included four of the same five factors. Then, being reputable and recommended was considered more important that being independent from a product manufacturer.
The point is that there’s a set of behaviours and characteristics that the public expects of financial advisers, and which underpins trust in the profession. It’s encouraging to see trust in advice holding up, but it’s just as encouraging to see the demonstrated behaviours of the advice professionals remaining consistent through really difficult and trying times.
That’s what professionals are paid for and, it’s what consumers will learn to trust.