Not happy Jan: advisers anxious about client expectations

Financialplanners are beginning to feel the pinch of unmet client expectations, as the downturn on the world’s share markets shows no signs of abating.

That is the major finding from this year’sAssirtAdviser Trends Survey, which shows advisers increasingly under pressure to deliver on behalf of clients, many who have put their toe into share markets for the first time in the heady years just before the current drawn out downmarket.

According to a report based on the survey, to be released by Assirt later this month, 70 per cent of advisers believe dealing with these client expectations is the most critical issue for their business in the current market environment.

“This widespread problem has its roots in the managed fund industry’s traditional practice of selling its products based on investment performance, which is untenable in today’s environment of low returns,” the Assirt report says.

The anxiety about client expectations totally overshadowed other more traditional business issues for advisers, such as gaining equity in master trusts or dealer groups.

According to the survey, only five per cent of advisers put gaining equity in master trust platforms high on their business priority list, while only four per cent thought becoming equity owners in a dealer group was important.

The spectre of poorly performing investment markets and unmet client expectations is also likely to hang over financial planners for some time.

The survey found the average up-front commission charged by advisers is 2.46 per cent, while the average trail commission taken is 0.52 per cent.

But the survey also found that advisers expect a squeeze on their margins, prompted in part by continuing low returns on investment markets, to be the biggest issue for the financial planning industry over the next year.

“Most planners feel they are already being squeezed to some extent,” the Assirt report says.