Consumers Questioning Value of Advice

What proportion of your clients perceive they are gaining value for the fees and/or commissions they pay you?

  • 50% - 74% (36%)
  • 25% - 49% (17%)
  • Less than 25% (17%)
  • Don't know (14%)
  • 75% - 99% (11%)
  • 100% (6%)

Two research papers released during the last week are indicating that fewer consumers are seeking advice from financial advisers, partly due to what they see as a lack of value in the process. Our latest poll is asking you to consider how you believe your clients currently assess the value you provide them:

What proportion of your clients perceive they are gaining value for the fees and/or commissions they pay you?

Amongst its key findings, CoreData’s 2012 Financial Planning Shadow Shop revealed there was a marginal decline in the ability of financial planners to acquire new customers last year, where almost 52% of respondents cited ‘value for money’ as an issue.

Another key finding from this research was that ‘ability to enthuse’ is no longer the most highly correlated factor with customer commitment to proceed to take-up advice. This has been overtaken by ‘value of the planner’s services’.

Hot on the heels of the CoreData Shadow Shop findings, REST Super has released research that reveals the majority of Baby Boomers have not sought financial advice to help them prepare for retirement. Taken from our report (Baby Boomers Unprepared for Retirement…):

… nearly 20% said they did not trust financial advisers, and a similar percentage said they believed financial advice was too expensive.

The main reason respondents gave for not seeking professional advice was because they handled their own financial affairs, or saw no need for the service. But nearly 20% said they did not trust financial advisers, and a similar percentage said they believed financial advice was too expensive.

Is your financial advice ‘too expensive’? Or does your financial advice proposition deliver excellent value, but is perceived by your clients and potential clients to be too expensive?

Then, there is the question of whether you receive your remuneration mostly via commissions or fees. A fee-based advice proposition is generally more transparent than a traditional commission model. Is there a possible link between more advisers charging fees and the increasing importance of the issue of ‘value’ in the mind of the consumer?

These research findings pose a lot of questions. Where are you positioned with your own clients? Do they all perceive that you are delivering value? Or do you have a challenge before you, to perhaps adjust your proposition and/or how you communicate it, in order that your clients can see the true worth of your services – your true ‘value’?

As always, tell us what you think…

4 Responses to Consumers Questioning Value of Advice

  1. Paul January 23, 2013 at 8:25 am #

    Fee for service is probably a progressive step toward professionalism for financial planners.

    I don’t think it will ever be viable for life-risk advisers though. Commission on this business has worked for a century or more why change it? Incidentally, are clients of stockbrokers happy with their service? Yet stockbrokers still charge commission (but they call it brokerage). And there doesn’t appear to have been much government scrutiny of that industry by the way. I wonder why?

  2. Jeremy Wright January 23, 2013 at 9:51 am #

    Clients perceptions of value is based on Investment advise. Clients do not put a value on Insurance advise as in their minds,Insurance advise can be sourced free and those that do agree to getting Insurance advise,the feedback is a fee they are prepared to pay is a fraction of the cost to deliver it,so Commission is crucial to the survival of the retail Life Industry.

  3. Steve Crawford - Experience Wealth Advice January 24, 2013 at 10:04 am #

    Clients put a value on every aspect of advice we provide them, whether it is Risk, Investment, Goals or Budgeting. In our business we believe the biggest issue for us is understanding how much value they place on each advice area we provide to them, and ultimately do we have the right solutions for what they want to pay us for.

    If Advice businesses are brave enough to ask their clients two questions they’ll know what they need to do:

    1) Of all the things we do for you, rank A-Z what you value the most to the least, and

    2) Of those advice areas, which are you most likely to refer a potential client to us for?

    We asked this question last year and the results helped us shape where we invested our time and resources in 2012, and again in 2013.

    Be brave and ask them…they’ll tell you what you need to do.

  4. gavin polmans January 30, 2013 at 7:53 am #

    Of course clients often don’t value our advice and absolutely they don’t want to often speak to an adviser or seek advice. The reason is that most people are so finacially illiterate about what they NEED , that what they ‘WANT’ is often totally divorced from what they need. We are the people that educate clients so that they can make an informed decision and then help themselves by buying our products and services. In stead of asking the masses what they want etc , do surveys and compare real life scenarios between those with an adviser and those without ie let the facts speak to themselves. As a small business owner, I can only help 3-500 people directly so my aim is not to spend thousands of hours trying to help people that refuse to be pro active and be responsible to help themselves and their families.

Leave a Reply