What are clients really seeking from their adviser?
The value of financial advice is one of the most discussed, debated, and researched topics within financial services.
Poor consumer understanding of the value of financial advice often translates into a lack of willingness to pay for it, resulting in a community uptake that has remained stubbornly low, in turn putting individuals at heightened risk of poor decision-making in an increasingly challenging and complex economy.
Rising costs and falling adviser numbers will only serve to put advice even further out of reach for many Australians.
As Australians deal with rising interest rates, a cost-of-living crisis and volatile investment markets, the need for expert help in navigating the financial landscape has never been greater, and successfully communicating the value of financial advice has never been more important.
But is the consumer concept of value in advice aligned with that of advisers?
Or is it possible that those advisers who build their proposition around being investment experts are not only misreading what consumers want, but are setting themselves an impossibly high bar to get over? Can advisers do more for the performance of their clients’ portfolios by being more of a coach/mentor and less of a stock picker?
In this article, we will explore the concept of value in advice, examining the latest research on what clients value in advice, and how the adviser value proposition is evolving to be less investment centric and more focused on spending quality time with clients. And how, as a result, advisers are building deeper, more sustainable relationships and delivering better outcomes for their clients.
What clients value most about advice
The value clients derive from advice may not be what advisers expect, with various studies revealing that the functional outcomes of advice (lower tax bills, higher investment performance) were less important than relationship and emotional outcomes.
An ASIC study[1] of consumer perceptions of the benefits of advice found empowerment, overcoming anxiety and helping transitions to new life stages were commonly cited, along with improved financial knowledge, providing a reality check and establishing goals.
Similarly, research by CoreData[2] found the five attributes of an adviser relationship most valued by clients were:
- understanding me, my circumstances and my needs
- trust
- ease of communication
- transparency, and
- competence in managing complex financial issues.
In the strongest client/adviser relationships, the adviser isn’t just playing the role of financial coach, they are providing all-round emotional support for clients navigating the ups and downs of life (many of which have financial implications).
This was reinforced by an XY Adviser Survey[3] which found that on average, Australian advisers spend 45% of their time with their clients talking about non-financial personal issues. That same survey also found these personal, non-financial conversations were having a positive impact on clients, with:
- almost half of advisers (47%) agreeing there was more effective communication between husband and wife, parents and children, or others who may be significant in the client’s lives, and
- 47% feeling their client was living a life closer to their core values, and enjoying what is most important to them.
The advisers surveyed reported a positive business outcome as well, with 52% saying their ability to do a good job at financial planning was enhanced or improved, and 39% agreeing their business had increased as a result. (Unsurprisingly then, 94% of advisers surveyed said their role as coach and counsellor was increasing in importance).
To continue reading and receive CPD points, view the original article on AdviserVoice’s website.
