Investors are starting to see the value of seeking financial advice despite low investor sentiment and confidence that shows little sign of improving, CoreData said in its shadow shopper report.
The CoreData Financial Planning Shadow Shop Report, which is based on seven beanchmark categories: assurances, compliance, quality, understanding, intention, reaction and environment, revealed an increase in the number of potential clients intending to take up advice.
“People lost a lot of trust during the global financial crisis (GFC) and part of that is investors find it quite hard to decouple the value of advice from investment returns, so they saw their portfolios declining and they lost trust in their advisers to actually demonstrate value,” CoreData head of advice, wealth and superannuation Kristen Turnbull told InvestorDaily.
“But I think that as we move away from the GFC, despite the fact that confidence is still quite low, people are starting to increasingly see the intangible benefits of seeking advice as well as the tangible benefits, so I guess that is a credit to the advisers that they are actually doing a good job of helping their clients understand what the benefits are of actually proceeding with taking up advice.”
She said although there was still a lot of uncertainty, people were sticking by their advisers.
“They do understand the long-term benefit of having advisers. We haven’t seen people getting scared and ending their relationship,” she said.
“We are not seeing any signs that it [sentiment] is going to improve. Sentiment continues to be low. But it will depend on what happens in the global economy over the next couple of months. People are certainly not looking to put new money in the markets or do anything at the moment; they’re just sitting on their hands and waiting it out.”
She said it was encouraging that the intention of potential clients to take up advice continued to improve following the GFC.
“However, the industry still has some way to go. Overall intention in 2011 remains neutral, with the results suggesting that most potential clients lack the impetus necessary to engage an adviser. Ideally, advisers should be converting all those who walk through their door looking for advice into clients,” she said.
“The proliferation of scoped or scaled advice may serve as a driver for increasing customer acquisition effectiveness, giving people the option of receiving their advice in a piece-by-piece manner and allowing advisers to scale down the costs and accessibility for consumers.”
The report details financial planners’ ability to engage real buyers of investment, superannuation and insurance, as well as deliver services within the framework set out by all relevant legislation.
Aged between 40 and 60, shadow shop participants were two to 20 years off retirement, actively seeking advice or looking to change their adviser, and held more than $150,000 in investable assets or more than $150,000 in superannuation.
