Commissions make no difference to clients’ perceptions of the quality of advice but planners still need to work on their image, says a leading consumer research firm.
The 2011 Retirement Planning Report, conducted by Roy Morgan Research, found that the way a consumer paid for financial advice had little or no bearing on their perception of the value of that advice.
“Amidst the debate in the industry regarding the Future of Financial Advice (FoFA) reforms and the proposed ban on commission payments on superannuation, our study has shown that the vast majority of those who have used a financial planner for their investment or superannuation needs have felt satisfied with the value they have received for the service,” said Norman Morris, Industry Communications Director at Roy Morgan Research.
Those who have used a financial planner… felt satisfied with the value they have received for the service
“Amongst respondents, there was a relatively even split of those who paid for advice through a commission agreement (42%) and those who paid under a fee for service arrangement (40%).
“What we have found however, is that there was very little difference between how each segment rated the value of advice they received,” he said.
However, the results further highlighted the advice-gap, with only 40% of respondents with superannuation saying they had sought financial advice for their retirement planning needs.
“The large number of people who have not used a financial planner, or are not in an active advice relationship, continues to reflect a level of apathy in the market towards financial planning that planners have not yet been able to overcome,” Mr Morris said.
“How financial planners overcome this lack of interest, and demonstrate the value they offer to both potential and unengaged clients may prove to be their biggest challenge over the coming years, as debate about remuneration structures continues and the image of financial planners remains relatively low compared to most other professions – according to the Roy Morgan Research Image of Professions Survey 2011,” he added.
The Image of Professions Survey (conducted in March this year) ranked financial planners at number 17 out of 30 professions in terms of their trustworthiness. Financial planners have only been included in the survey since 2009, where only 25% of those surveyed rated planners High and Very High for their ethics and honesty. In 2011 that percentage increased by 3% to 28%.
