There has been considerable buzz lately about correcting perceptions. A social media campaign is trying to influence the manner in which Australians, and in particular people who use financial advisers, view our industry. That’s well and good, but my strong opinion is that advisers also need to alter the way that they view their clients.
It is commonly held by advisers that the service most valued by clients is portfolio construction and investment advice. However, when clients are asked what they value most the response supported by numerous surveys over the past 12 months is the relationship
Clearly, there is a fundamental disconnect. On the one hand we have financial advisers who believe that their skills at structuring and maintaining portfolio performance are of high worth. After all, the returns that people receive from the tailored strategies that advisers devise clearly demonstrate their value in hard dollars and cents. Yet clients actually value their advisors much more highly for having a deep and personal understanding of the things they want out of life.
It is critical that financial advisers heed this point. Clients generally are much more interested in what their investments will provide for them than on actual returns. One way to do this is to explain how investment returns can deliver the things they want from life – trips, boats and the like. That is much more meaningful than a detailed technical explanation about investment strategies and rates of return.
For many advisers, this means a fundamental change of mindset. They need to move away from being pure practitioners to focussing on the factors that truly drive their businesses. It means that, first and foremost, they must see themselves as business leaders. Like it or not, this is where our industry is heading in the wake of regulatory and other fundamental changes.
Surveys also tell us that advisers currently spend 60% of their time on administration, meaning they are taking less and less time to interact with clients. This begs the question, why is so much being invested doing things less valued by clients at the expense of those most valued? When asking our advisers that question, the common answer is that they simply don’t have the time given the level of administration they are forced to undertake. Sadly, this is true while ever they continue with an outdated mindset.
Flipping to a client first focus means that efficiencies have to be found. Entrenched practices may need to end, passing the responsibility for the delivery of some services to others. That may mean a greater reliance on dealer services such as the creation and maintenance of model portfolios, strategy development and administration support. Handing responsibilities back to the dealer will not only result in significant time savings but will also go a long way to de-risking the advice business.
Now is the perfect time to make the change. FoFA is largely settled and a new financial year in its infancy. Start by making sure that you clearly know what your clients want, as opposed to what you think they want. With a clean sheet of paper, craft a strategy that ensures the business can deliver to your clients’ expectations. For many, this could be difficult because it will mean breaking deeply ingrained habits.
But I’m happy to stick my neck out and say that if an adviser has a contented list of clients, then they will receive from them an increased level of referrals. Indeed, if they ask clients for referrals they will likely be greeted with more than they receive now.
Dennis Bashford is Managing Director of Futuro Financial Services Pty Ltd
