Communication is more important than price when it comes to choosing a financial adviser, according to new research released by MetLife Australia.
The insurer says in a statement that its Adviser-Client Relationship Report 2019 indicates advisers can use communication to build trust with their clients. (Also see: Annual Reviews Key to Client Retention and New Referrals).
The research looked at the most important attributes consumers and SMEs seek in a financial adviser, with the top attributes being:
- Honesty and trustworthiness (85 percent)
- Transparency about fees and commissions (78 percent)
- The adviser experience (75 percent).
The company notes that of those consumers surveyed, 55 percent were not able to recall the amount of commission their financial adviser receives, “indicating there is an opportunity for advisers to educate their clients about any commissions and fees associated with their advice or financial products, ultimately driving up financial literacy”.
… an alarming 40 percent of consumers and 60 percent of SMEs with life insurance currently have concerns their life insurer would pay out in the event of a claim …
The research also looked at the barriers for engaging a financial adviser for advice, which “uncovered an alarming 40 percent of consumers and 60 percent of SMEs with life insurance currently have concerns their life insurer would pay out in the event of a claim”.
MetLife says these concerns are somewhat unfounded, as ASIC shows that 96 percent of death claims, 95 percent of income protection claims, and nearly nine in 10 (87 percent) of TPD claims were paid out in 2018 for policies bought through a financial adviser.
The insurer says that advisers should view this as an opportunity to initiate more frequent and relevant communications with their clients, to develop a relationship which is more akin to a partnership.
“Simple keeping-in-touch practices such as letting clients know when their next review will be, how their claims are progressing, and setting upfront expectations around communication frequency can go a long way in building open and trusting relationships between advisers and clients,” the statement notes.
Jeff Scott, MetLife Australia Head of Advice Strategy, says that there’s no doubt that the number one priority for the industry right now is to build open and trusting relationships with consumers.
“From this year’s research we know that many potential customers are choosing not to seek out expert financial advice based on unfounded concerns around claims not being paid out. Yet we know that in reality, the vast majority of death, income and TPD claims are in fact paid out.
“There is clearly a huge role for frequent and relevant communications to play in quelling these mis-perceptions and alleviating concerns. Advisers have an opportunity add significant value to risk clients: first by informing them of their duty of disclosure at application time, and secondly, by being an advocate for their clients at claim time.”
Scott says one area where serious leaps can be made is in relation to transparency about fees and commissions. With more than half of consumers unaware of the amount of commissions advisers are being paid for their advice, “financial advisers should be prioritising clear and regular communications about their fees with clients”.
Now in its second year, the company says the MetLife Adviser-Client Relationship Report 2019 is the largest quantitative study of its kind. It includes insights from consumers and SMEs with up to 20 employees which have life insurance purchased through a financial adviser and consumers who are very likely to see a financial adviser about life insurance in the next two years.
