The problem with financial advice is that it’s not tangible. Unlike buying a plasma screen television or sports car, the purchaser has no immediate evidence of its inherent value. A financial advice client is not given anything to plug in or drive away. The material benefits of financial advice may only be perceived 10, 15 or even 20 years down the track when a financial plan comes to fruition. Financial advice’s intangibility means financial planners need to be extraordinary communicators in order to relay and convince clients of the benefit of their work. Not only must their communication be excellent, but they must be able to build rapport and trust with their clients in order to be successful.
Market intelligence from Sydney-based research firm brandmanagement shows a solid proportion of Australians who seek financial advice reject it because the client/planner relationship fails or they find the advice unsuitable or poor. Its studies found 28.7 per cent of Australians have an adviser, while 25.1 per cent do not currently have a financial planner, but have used one in the past.
So what happened? Is this 25.1 per cent made up of people who feel good, bad or indifferent about the financial advice they got? One has to wonder: did the financial adviser not communicate the benefits of their work properly? On the upside, brandmanagement found Australian financial advisers are good at demonstrating professionalism. They are perceived as honest. They give the perception they’ve met the needs of the client and demonstrate understanding. Brandmanagement’s research is collated from the experiences of hundreds of real consumers genuinely seeking to buy a financial service or product.
Trust for people and profit
“Financial services, as the name suggests, is very much a service industry. It’s a difficult thing that’s being transacted because it’s also not consumed immediately. It’s very much based on trust,” brandmanagement head of market intelligence Craig Phillips says. “Trust has to come over time and it has to be built slowly, that’s why financial advice is built on that referral basis. If you can trust that someone close to you has had a good experience with this person, then you’re likely to use that person too.” Trust takes existing clients over the line and generates new business. To build trust, planners need to improve disclosure of fees and soft incentives, Phillips says.
Sunshine Coast-based Universal Financial Solutions financial planner Warrick Bidwell says: “Given that people are referred to us in 98 per cent of cases, probably their first impression of us is what their friends told them about us. “Everything about what we do comes back to the relationship that we have with our client and that’s all centred around trust. “If our clients don’t trust us, they won’t take our advice and therefore we’ve failed in what we were trying to achieve for them.” Only 65 per cent of those surveyed in brandmanagement’s study, “Reality of Advice – The Consumer Perspective”, would refer the adviser to friends, family or colleagues. It also found 65.5 per cent would use the planner again.
“Some people might think that’s okay, but I see 65 per cent as a relative sign of indifference,” Phillips says. It could also be perceived that 35 per cent would not recommend the planner. Financial advisers are comparatively poor at demonstrating the benefits of their advice, brandmanagement’s study found. They scored 90 per cent for demonstrating comprehensive knowledge, 78 per cent for professionalism and 95 per cent for communication. However, explaining the positive outcomes of their advice scored 76 per cent. Phillips says this is a major hurdle advisers have to get over.
“We’re very much in a culture, especially in the younger generations, where it’s very much consume today and pay tomorrow,” he says. “It’s very debt-driven, people want instant gratification. They’re not putting money away . people don’t have the saving mentality.” Some turn intangible financial advice into something solid by using client testimonials or financial modelling software to physically demonstrate the benefits of their advice on a client’s financial wellbeing.
Daggy cardigan and slip-ons?
“In our business we draw parallels between sports coaches and wealth coaches with our clients and we really portray that in our image and the first impressions we make,” Bidwell says. “At Matrix we’re all fit, healthy, centred individuals. People want to do business with us and want to be a part of whatever it is we’re offering.” Do looks matter? Brandmanagement found planners’ physical presentations do let them down. Office exterior, interior, and the social presentation of the financial adviser scored around 90 per cent with consumers, but planners’ looks bombed at 70 per cent. “It tended to be the females who were pickier in terms of the physical aspect,” Phillips says.
“They would notice things like the planner maybe had a bit of lunch on his tie or his shirt wasn’t tucked in or whether they were wearing casual clothes.” Accru Financial Planning principal and director Matthew Kidd says when he worked as a business development manager (BDM) he saw numerous financial planners, who were also accountants, with very poor physical presentation. “When I went to one accountant who was financial planning, I walked into the old daggy foyer and the bins down the bottom of the stairs were overflowing. I then walked up the stairs and there’s an old dirty door with the logo and they had old, daggy ripped corduroy furniture. It was horrible. I wanted to say to this guy: ‘do you understand what first impressions are about?'” Kidd says.
“I wouldn’t give him a dollar to invest, let alone let him do my tax. I discovered that he wasn’t Robinson Crusoe. I was new to New South Wales and new to BDM-ing. I found so many tragic sights. They just don’t get it. They think: ‘I’m an accountant. Why should I spend good money on a reception? Or having a nice office? Or wearing nice clothes, instead of sitting back in my daggy cardigan and my slip-ons.'” Futuro Financial Services managing director Dennis Bashford recognises the importance of the first impression an adviser makes on a client. “I remember a fellow saying to me very early in my sales career, ‘you should always look the part. You might be pretty mediocre, but if you turn up looking the part there’s a good chance it might take them 20 minutes to find out you don’t know what you’re talking about. But, if you’re an expert and turn up in a stubby and thongs, people might not talk to you at all’,” Bashford says.
The right office vibe is essential to make the right first impression with a potential client, James Walker-Powell, principal of JWP Financial Services in Brookvale, Sydney, says. Empowering staff in their job and allowing them to take ownership of the company vision is the answer, Walker-Powell believes. “If you can acknowledge what their unique ability is and what your unique ability is and you can capitalise on their unique ability and they can buy into your vision, then it’s an accumulative vision as opposed to one person’s vision,” he says.
Fact-finding can cheese off clients
Consumers often feel financial advisers are poorly prepared. Brandmanagement’s shoppers gave advisers a rock-bottom score for information gathering because they can see fact-finding in initial meetings as an annoyance. Phillips suggests planners avert this by sending out information about themselves, their staff and dealer group prior to meeting. Association of Financial Advisers chief executive officer Richard Klipin says an adviser can make a good first impression before the client has stepped into the office. A good adviser’s pre-appointment process should involve confirming the meeting and sending the client a list of financial material to bring or things to consider.
“This is a serious process. The more engaged, the more prepared the client is, the better and more engaged the first discussion will be,” Klipin says. “The first appointment is about building trust and empathy, getting to know the client, finding out their goals and aspirations.” Getting the balance right is critical as a meeting’s success relies on the adviser establishing credibility, but making the session about the client, not the planner. “You’ve got to set them at ease . you don’t want to have idle chit-chat, but you need to open up the doors of communication. You can’t just dive in and say: ‘right, how much money have you got to spend?'” Kidd says.
“Tell them a bit about yourself. Sell the business; sell why it’s a good fit. Open yourself to questions, be transparent. Accountants and financial planners don’t sell themselves enough.” Greater transparency and access to adviser qualifications and track record is required, brandmanagement found. Phillips also warns planners need to find a balance for efficiently conveying their credibility early on, without talking too much about themselves. Walker-Powell uses a self-devised client-facing tool, the My Life workbook. He works through it with clients to find out about their financial goals and aspirations and demonstrate he is there for them, not his own self-interest.
“What you’re doing is establishing four key areas. You’re allowing them to take control, but you’re giving them the confidence and security to take that first bit of action by establishing some kind of commonality and showing them what they can expect,” he says. He hands new clients a list of answers to questions they may have about his dealer group, remuneration and his qualifications. Often advisers do most damage to their image after a client has left the office. Brandmanagement’s investigators found advisers were generally very poor at following up after initial meetings. Phillips says this points to the talent squeeze. “They’ve got so many clients coming to them and some do cherry-pick the more profitable clients or the easier clients to deal with,” he says. Perhaps advisers should try look at things from a client’s perspective. What first impressions do you give?
