The results of an academically conducted survey into investors’ attitudes towards financial advisers have completely rebuffed those of recent surveys that apparently show growingly negative perceptions about the industry.
The latest results of the Lifeplan Funds Management financial advice satisfaction index have revealed that investor satisfaction with financial advisers is at its highest level since the inception of the index in 2007.
Conducted by the University of Adelaide’s International Centre for Financial Services every six months, the survey looks at changes in investors’ attitudes towards their advisers, including their perception of their trust and reliability, technical ability, and investment performance.
The latest satisfaction index has increased to 74.5%, up from 72.3% in October 2013.
Head of Lifeplan, Matt Walsh, told Wealth Professional
these latest results counteract other recent surveys which say the perception of advisers is negative.
This could be down to the method in which some surveys are undertaken and the way that the questions are asked.
The Lifeplan advice satisfaction index is sound, Walsh said. The latest process included talking to 403 investors who use financial advisers, and having the results analysed on an independent and academic level.
He said people will generally give a different answer if they are asked: “what do you think of financial advisers” than if they were asked: “what do you think of your adviser”.
“There’s a dichotomy between what people say about their own planner to how they talk about the perception of the industry. This survey uncovers what people say about their own planners,” he said.
Walsh said the survey reveals the “green shoots” of the new advice industry, which is now starting to regain momentum after the GFC.
Advisers have recovered and even slightly exceeded the levels of pre-GFC satisfaction, and in many ways the GFC has helped the industry to shape itself in a better way, he said.
“It’s made the necessary changes, responded to them, and now we’re seeing the rewards of that. I think with [the levels as they are] advisers will withstand a shock to the market if it does fall, but if it stays steady we’ll see a rise.”
Importantly, Walsh said that more recent improvements in the domestic and global landscape are not the sole reasons for the increase in satisfaction – much of it is down to the advice profession itself.
When academics analysed the results of the survey in comparison with the market performance, they found it couldn’t completely explain the increase.
Walsh said that a de-coupling from advisers once selling themselves based on their market performance to post-GFC having to demonstrate a more holistic set of skills has been a big driver in the increase of investor satisfaction.
The survey’s results, on the back of the implementation of FoFA, reinforce the importance of the government’s decision to pause any wind-back of the reforms, he said.
“Reintroducing commissions for example could seem innocent but potentially [unleash] the ogre of how the industry is perceived, because it is all about perception,” he said. “It indicates to me that the pause should be continued for longer, [the changes] shouldn’t be rushed into, and research, such as ours, should be considered. They need to make a very informed decision.”
Walsh said while some of FoFA’s practical or efficiency-based changes won’t pop up on a client’s radar, any fundamental changes could affect the relationship between advisers and their clients.
He also said that if advisers want the positive public perception to continue today and beyond, they need to be wary of trying to attach too much credit of good market returns with their own performance.
“Because when the markets fall, they will fall with them,” he said. “We need to push the long-term and holistic nature of advice. Advisers should hold their ground – it’s important that they sell the whole value proposition.”
Apart from these warnings, Walsh said the financial advice satisfaction index results are a “real tick of approval” for the industry.