Clients happy with advisers’ trustworthiness and knowledge


The latest Lifeplan ICFS Financial Advice Satisfaction Index shows that investors are satisfied with the trustworthiness and knowledge of their financial advisers, although they feel somewhat pessimistic about the performance of their investments overall.

The survey of 418 investors who use financial advisers was undertaken in September by the University of Adelaide’s International Centre for Financial Services (ICFS) for Lifeplan, and sought feedback about the performance, trust and reliability, and technical ability of their financial adviser.

Mr Matt Walsh, head of Lifeplan, said that, despite continued negative reports about the financial planning profession, it is clear that investors who use an adviser value the relationship, and have a high level of trust in their adviser.

“The level of trust in advisers amongst clients is much higher than trust amongst non-clients, as shown by the recent Roy Morgan survey*.  It highlights the value of satisfied clients in promoting the value of financial advice, and also in generating new business development through referrals and word-of-mouth.

“This is particularly true of those aged over 60, who show the most favourable view of their adviser in the survey.

“This group have seen for themselves their adviser’s technical ability over time and in different market conditions, and believe that the strategies they have implemented since the financial crisis have weathered the last downturn well (since April 2010).

“It shows that advisers have succeeded in establishing strategies that are appropriate for this group’s needs, and these clients make up the bulk of the industry’s client base and are the ones most likely to provide word-of-mouth recommendations about their adviser,” he said.

The survey also showed that those who have had a relationship with their adviser for longer than five years are amongst the most satisfied.

“Despite having experienced the global financial crisis and subsequent market downturn, this group remains happy with their financial adviser, suggesting that they recognise the value of financial advice and the role it plays in developing long-term strategies to withstand economic and market cycles,” Mr Walsh said.

He pointed out that a possible sign of future problems could be seen in the survey’s results on investors’ satisfaction with the performance of their investments.

“In past surveys, the level of satisfaction with performance has often been a leading indicator for satisfaction with trust and reliability, and technical ability. Therefore there could potentially be a decline in these areas over the short-term.

“The findings suggest that some investors believe their advisers should be able to predict market movements and investment performance and, when things go badly, they blame their adviser.

“This kind of investor behaviour is unfortunately quite common, where people look for someone else to blame rather than accepting that they have made a mistake, or that they can’t control investment outcomes or market performance.

“However, it is clearly a concern for advisers, who need to ensure they are managing their clients’ expectations of how markets perform, and how far their own advice can go,” Mr Walsh said.

The survey was conducted in late September, when the Australian equity market had fallen after the highs of April. The long drawn-out results of the Australian Federal Election, housing market downturns, higher interest rates and lower equity markets, would also have had an impact on investors and how they viewed their investments.

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