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Research conducted by Perpetual has found that clients are becoming wary about advisers recommending ‘in-house’ financial products and funds.
Clients are also starting to look for evidence of their adviser’s financial expertise, including evidence of technical skill, training, accreditation, research and product knowledge.
Perpetual said the financial crisis and the recent heightened scrutiny of the sector had served to focus consumer attention on the value for advice.
Perpetual senior manager, customer insights, Richard Lea, said there was a fundamental disconnect between adviser and client perceptions of the value of advice, with advisers placing value on the strategic advice they provide, as well as ongoing reviews and guidance.
Clients, however, value investment performance – though not exclusively. Clients also place value on a high level of contact with their adviser, a sense that the adviser is working in their best interest, and a sense that the adviser is an expert in their field.
With investment performance not currently an easy way for an adviser to prove their value, clients are looking for a tangible demonstration of what their adviser does, Lea said.
Perpetual’s general manager adviser distribution, Damian Crowley, said “the key to the future of developing loyal and appreciative clients is in bridging the gap in understanding between advisers and clients about what advisers actually do”.
“It is critical that advisers articulate what they do for clients, and what clients are responsible for. And this must be done at the very beginning of a relationship, when clients’ expectations are set. It is also vital to remind them and reinforce these expectations on a regular basis, for example at every review.”
Crowley said when practices continually revisit their value proposition and what they offering clients, advisers were often able to charge very significant premiums because the value of their advice was so evident to their clients.
“We found practices could dial fees up and down based on the work required and the value that could be added for clients.”
Perpetual offered a blueprint for successful advice practice in 2015, with elements including an ability to define and charge for strategic advice, offering a range of integrated professional services, and superannuation structures driven by client need rather than constrained by adviser preference.
Perpetual said successful advice firms of the future would also offer direct investments in addition to managed funds, and would have sophisticated administration systems that allow all transactions to be made online.
