AFA: The advice relationship – a matter of trust

Brad Fox – CEO – AFA

Australia’s leading advisers are trusted advisers. This is the central finding in The Trusted Adviser, a white paper released today by the Association of Financial Advisers (AFA) with the support of Zurich and research by the Beddoes Institute.

The Trusted Adviser profiles results from 13 financial advisers  – and over 500 of their clients – who were among the highest ranked candidates in the AFA Adviser of the Year Award in 2011 and 2012, to understand the attributes of a ‘trusted adviser’ and the associated benefits to an advisory practice once this trusted status is obtained and maintained.

“The Trusted Adviser establishes that Australia’s leading advisers are not only distinguished from their peers by their technical expertise, but are even more differentiated on their emotional intelligence (EQ),” said AFA CEO Brad Fox.

“This has significant consequences for training, development and recruiting within the industry.”

Mr Fox said the research proves that trust is the most valued ingredient in the client-adviser relationship.

“When clients feel they have a trusted relationship with their advisers, their satisfaction levels are higher, they are more willing to pay fees and their financial outcomes are likely to be better,” he said.

The Trusted Adviser is an extension of the AFA’s Pathways to Excellence research released in October 2012, which revealed that to meet the needs of the modern consumer and become a leading financial advisory firm, advisers must have a high level of performance across four key areas:

1. Adviser qualities
2. Practice service proposition
3. The advice process
4. The practice charging model

The Beddoes Institute’s Dr Rebecca Sheils said The Trusted Adviser research takes a deep dive into the first of these key criteria, adviser qualities, revealing that the two key ingredients of a trusted adviser are superior technical skills and strong interpersonal skills.

“Academic qualifications and technical proficiency on their own will never be enough to build sustainable relationships with clients,” Dr Sheils said.

“The Trusted Adviser demonstrates that the way an adviser interacts with the client and the development of a relationship with them are more influential in developing trust.”

Dr Sheils said advisers therefore need to develop ‘soft skills’ like rapport building, communication, effective listening and empathy.

“Importantly, these skills are underpinned by one’s EQ level which, unlike IQ, is a type of intelligence that can be learned and developed with the right training,” she said.

Mr Fox said the challenge now is to better target support services for advisers, especially in the development of EQ, so that advisers generally can develop stronger, more valuable client relationships.

“Members of the AFA have proved by way of record attendances at our road shows and Conference, and participation in our professional designations program through Campus AFA, that they are committed to life-long learning,” he said.

“The Trusted Adviser provides the evidence that consumers value the practical outcomes of this training – outcomes that create a sense of trust; of a shared journey. And in the light of recent reporting on research that says consumer trust of financial advisers/planners is at a low point, this paper demonstrates what is required by the advice industry to correct these perceptions.”

Mr Fox said advisers and licensees need to heed the message: “To be a leading adviser in the eyes of consumers, you need to be both technically competent and soft-skill proficient.”

Philip Kewin, Zurich’s General Manager Retail Life and Investments, said Zurich is delighted to continue its partnership with the AFA to deliver ground-breaking research to the financial advice industry.

“We believe the insights gleaned from The Trusted Adviser will help the industry as a whole develop a value proposition that encourages more Australians to seek financial advice,” he said.

“It will also lead to education and training programs that equip advisers to form long-term, trusted relationships with their clients and in the process, transform their businesses.

“We are also extremely pleased that the AFA has been able to leverage and distill the research on candidates from their Adviser of the Year Award to reinforce that these leading advisers have indeed earned the mantle of being their clients’ Trusted Adviser.”

To download the full white paper click here