How do we regain trust after the Royal Commission?
Over the last few weeks, our industry has been on trial and financial advisers and companies have been placed under fire. We have seen CEO’s resign from the top position, board members step down, and client’s left feeling misled, resulting in distrust within the industry. With these recent revelations, how do we reassure our clients to trust the industry and to trust us as their financial adviser?
Educate your client with tailored advice
A recent seminar I went to had the results of a survey about financial advice*. The survey** asked people, what they look for in an adviser . One of the top answers was that clients want you as their adviser to educate them with tailored financial advice, and I agree with this. I believe that most (if not all) clients want an adviser to keep it simple, with as little jargon as possible, and to let the client know what they are paying for and how your strategy will help them achieve their goals.
Disclose all fees
There are a number of ways that planners are remunerated including commission, fee for service, asset-based percentage or both. When a client knows upfront what sort of fee structure they are on with the adviser, there is less chance the client will be caught off guard when the yearly Fee Disclosure Statement (FDS) arrives in the mail. Clients do want to pay a price for top quality service they receive from advisers as long as there is total transparency.
Relevant qualifications and membership of an industry body
Advisers who are members of such bodies as Financial Planning Association of Australia (FPA), or Association of Financial Advisers (AFA) are required to undertake ongoing training and further education to continue to be an adviser. This typically shows that an adviser is committed to keep up to date with industry news, standards and regulations.
Having the relevant qualifications are also important for an adviser. Typically a bachelor’s degree in business, finance, economics or financial planning along with a Diploma (DFP) or Advanced Diploma of Financial Planning (ADFP) is a minimum requirement of being a financial adviser. Legislation is tightening the minimum requirements of being an adviser and may soon have advisers complete a Graduate DFP or Masters Degree in Financial Planning.
To summarise, not all financial advisers have done the wrong thing. You never really hear on the news about great advice provided to a client. There are many successful advisers who have helped their clients through tough times and built happy and life-long relationships with their clients. The Royal Commission has definitely put our industry under the microscope, but as long as the high quality advisers persevere and continue with great advice, our industry will still continue to do what we set out to do: help our clients.
*Speaker: Matthew Wakefield – National Account Manager at AIA
**Source: The advice challenge: Understanding what clients value, AIA Australia and Beddoes Institute, July 2015