Advisers may think they are being compliant with the regulation but for their clients, it is often communication that can cause the biggest headache.
Compliance firm Assured Support believes clients feel most frustrated when they are “confused, misled, overcharged or ignored” by their adviser.
This ties into research by the Australian Financial Complaints Authority (AFCA) that found the biggest investment and advice complaints include inappropriate advice, inadequate disclosure or explanation, poor communication, and unrealistic expectations about performance and risks.
Financial adviser at Assured Support, Emanuel Kazoullis, said: “While advisers often view compliance through the lens of ticking regulatory boxes and staying off ASIC’s radar, clients have a very different idea of what compliance means.
“Clients don’t read RG175 or keep a copy of the Corporations Act on their bedside table. Their version of non-compliant is when they feel confused, misled, overcharged, or ignored. This misalignment creates a nasty little trap. Advisers may believe they’ve done everything right, yet still face complaints that AFCA upholds because the client experience didn’t match the paper trail.”
He suggested examples of behaviour which could have caused issues such as failure to explain to a client how their insurance would be impacted by a superannuation change and failure to complete an annual review in a timely manner. In another instance, an adviser received a complaint when the market dipped because they had failed to manage a client’s expectations about expected market returns on their investment.
On the other hand, those advisers who have good communication can successfully build trust with their clients, clarify expectations and align their intentions with the client. Advisers should explain their advice in plain language, document conversations, deliver their service on time and foster trust with their clients.
Kazoullis recommended five tips to ensure clients are happy with your service:
- Use plain language (without being patronising).
- Document conversations, ideally in the client’s own words.
- Invite questions from the client and answer them.
- Set clear service expectations of what the client is paying for and what they can expect to receive.
- Ensure trust is held between the parties.
Last month, research by Morningstar found the biggest irritations held by clients towards their adviser were failing to provide a breakdown of fees, taking more than a week to complete a task, using financial jargon, recommending investment without considering values, and suggesting investments without going into detail.
Some 70 per cent of advised consumers said they disliked it if an adviser took more than a week to complete a task, while 79 per cent disliked being provided with a long report.
