The most important factor for consumers when choosing an adviser is a referral from a trusted source, new research commissioned by Zurich has found.
As part of the industry-first Designing the Future study, conducted on behalf of Zurich by The Beddoes Institute, researchers analysed advice sector trends over the past three years, finding that referrals are the number one reason advice clients sought out the service of their current adviser.
The study showed that referrals were three times more important to consumers than the next highest consideration factor, which was tailored financial advice. Technical product knowledge was viewed as important by just 3% of those surveyed.
Further, looking back over the last three years, Beddoes highlighted that consumers’ reliance on referrals has jumped from 37% in 2012 to 43% in 2014.
Beddoes Director, Dr Adam Tucker, attributed the increase to the low-trust environment in which advisers are operating:
“One, it’s the media backdrop. Two, consumers really don’t know what advisers do. I think fee transparency has been an issue, but that is starting to resolve, as we see some of the effects of FoFA being adopted. And there’s this question of ‘What is the value of a financial adviser – what use are they?’
This trust issue is one of the biggest barriers that is preventing people from pursuing an advice relationship
“In contrast, if you’re operating in a high-trust environment, the client is going to tell their adviser more, and they’re going to be able to offer the client better advice and therefore better outcomes.
“We know there is a high demand for advice. This trust issue is one of the biggest barriers that is preventing people from pursuing an advice relationship.”
Zurich’s Head of Marketing and Communications, Richard Dunkerley, added that this finding had ramifications for the way advisers market their businesses.
“Service and product knowledge were way down the end of the scale in terms of importance to consumers. The corollary of this is that those advice practices whose websites focus on the products offered and talk about the advisers’ qualifications and experience, and less about what they’re like as people and how they can be trusted, are completely missing the point.”
