Despite the market downturn, investors remain confident in the technical abilities of financial advisers, but the downturn has affected the perception of the trustworthiness and reliability of some planners.
The latest Lifeplan ICFS Financial Satisfaction Index has dropped from 73.2 to 69.5 per cent in the last six months.
Of the three elements that make up the index, the one most responsible for the latest decline — investment performance — is able to be regarded as largely outside a planner’s control, said Lifeplan Group marketing manager Caroline Patrick.
Client opinions of the trustworthiness and reliability of their planner showed a slight fall, down 2.5 per cent, while the third measure in the index, perceptions of a planner’s technical abilities, increased by 3.5 per cent.
Lifeplan general manager, strategic development, Matt Walsh said the index decline hadn’t been as great as expected, speculating that clients may have held their advisers more accountable than they have during the volatile market.
Walsh said advisers have done an excellent job with educating their clients before and during the volatility, and that as a result, clients are benchmarking advisers against the creation of a balanced portfolio rather than share market performance.
Patrick agreed that the rise in the perception of advisers’ technical ability has improved due to advisers being more active in the past six months in recommending investment strategies to clients, such as rebalancing their portfolios.
She said the improved view is most noticeable among 30 to 44-year-olds and those over 60, who are the groups most likely to be actively reviewing their portfolios.
The index suggested advisers should spend more time and effort communicating with investors who have recently joined them. These are generally the clients more likely to be critical of their adviser, and as such need more attention for trust to grow in the relationship.
The index showed men’s view of their adviser’s trustworthiness, reliability and technical ability has improved over the past two years, thus closing the gender gap between male and female perceptions.
However, Walsh said “it would not be unreasonable to conclude from the survey data that women may have had a greater negative reaction to the market volatility than men, at least with respect to their perceptions of the trust and reliability of their planner”.
