At a time when regulatory change and the operating climate is forcing many financial advisers to rethink their business models, the latest cycle of the Lifeplan Financial Advice Satisfaction Index confirms that credibility, personal relationships and individual service are still the cornerstones of a successful financial planning practice.
The Index is undertaken for Lifeplan Funds Management by the University of Adelaide’s International Centre for Financial Services (ICFS), and looks at the satisfaction levels of clients in three areas – performance due to financial advice; adviser’s technical ability; and trust and reliability of their adviser.
Mr Matt Walsh, head of Lifeplan, said that despite patchy investment performance; the reforms; and adverse commentary about financial advisers’ remuneration, clients who have a solid relationship with their advisers are still satisfied.
“Individual advisers’ credibility in the eyes of their client is the biggest factor in satisfaction.
“Credibility does not relate solely to expertise and knowledge, but also to the perception of trustworthiness.
“Indeed, the latest Index suggests that a client believing that their adviser is acting in their best interests is just as important as believing their adviser is knowledgeable.
“This is an important premise to build on for those advisers who are developing new business strategies following the announced reforms to financial advice,” Mr Walsh said.
The April 2010 cycle of the Lifeplan Financial Advice Satisfaction Index also looked at the development of wealth transfer strategies for investors.
It showed that of those surveyed, 61.6% of clients had discussed the transfer of wealth to their next-of-kin, charity or other beneficiary with their financial adviser. From this discussion 73.7% of advisers helped their clients with creating a strategy for managing their wealth transfer to their chosen beneficiary (45.4% total).
Mr Walsh said that the latest Satisfaction Index also showed that those investors who have created a wealth transfer plan with their financial adviser are more satisfied with both their adviser and their overall investment plan.
“The index for those that have created a wealth transfer strategy with the help of their adviser stood at 79.7, while those who hadn’t stood at 65.9 – a significant difference.
“This may suggest that creating a wealth transfer strategy can enhance client satisfaction with their planner. However, it may also be generally indicative of the adviser having developed a well-rounded consultation or investment plan.
“While the more traditional functions of financial advice - such as managing risk, selecting managed funds and advising on retirement - are still clearly more important to investors than estate planning, lack of such planning could also reflect clients’ unwillingness to address the topic of their death and its impact on their family.
“Arguably, advisers should take the initiative, as estate planning can be an important service for planners looking to expand their services to suit retired clients, while extending their relationship with other family members,” Mr Walsh said.
Lifeplan Funds Management is a specialist business of Australian Unity Investments. It is the market leader in investment and funeral bonds, and a leading provider of education investment funds. It has over $1.6 billion in funds under management (as at 31 March 2010).
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For more information please contact:
Matt Walsh
Phone: 08 8236 4706
Email: Matt.Walsh@lifeplan.com.au
