Financial advisers may risk losing clients if they fail to demonstrate long-term value of advice, the latest research from MetLife Australia has revealed.
MetLife’s second annual Adviser-Client Relationship Report 2019 found that advised Australians know more about their insurance than last year, with more respondents aware of their level of cover, premium amount paid, and the difference between stepped and level premiums.
However, the research also found that consumers are still confused around the value of expert financial advice, suggesting there is an ongoing need for advisers to demonstrate their value by properly educating clients of the benefits of the service.
This is a step advisers should take sooner rather than later as the report found 3 in 10 consumers and 5 in 10 SME’s report they are considering either changing their current adviser or ceasing to use one completely, with the top reasons including high premiums, lack of affordability or contact and no ongoing need for insurance.
Further key findings included:
- The top reasons for people to see an adviser about life insurance is to ‘protect their family’, followed by ‘receiving a recommendation from a family member or friend’
- Consumers and SMEs are willing to pay an average of $1,700 for insurance advice
- 40 percent of consumers thought life insurance bought through an adviser is more expensive than a policy they could buy directly online or through a superfund and only a third of consumers believed the product was better
The report noted that the average upfront fee consumers were willing to pay was below the average cost to deliver quality financial advice, suggesting a critical need to retain commission-for-advice as a way for people to pay for these services.
MetLife Australia Head of Retail Sales, Matt Lippiatt, says, “The recent spotlight on the financial services industry has caused clients to take a more active interest in the financial products and services they hold and question the value they’re getting from these relationships which can perhaps explain why Australians know more about their insurance cover this year.”
“…there is no such thing as a ‘set and forget’ client anymore.”
But he added a key challenge for financial advisers is demonstrating their value from the first meeting with a client and reinforcing this value over time through open and regular communication.
The report noted that advisers who are successfully bridging this gap appear to be:
- Setting and agreeing on realistic expectations for both clients and advisers in initial meetings
- Working closely with their client like a partnership
- Demonstrating ongoing care and value through simple measures such as annual reviews and contacting clients at important times in their lives, such as buying a house and having a baby
“If there’s a key takeaway from this research it should be that there is no such thing as a ‘set and forget’ client anymore. Client engagement should be the number 1 priority on every advisers business plan for 2020.”
The survey included insights from consumers and Small to Medium Enterprises (SMEs) with up to 20 employees who have life insurance purchased through a financial adviser and consumers who are likely to see a financial adviser about life insurance in the next two years.