The client experience

The perception from mainstream media, politicians, ASIC and some clients is that all advisers focus on is the adviser, but those on the inside know that if it weren’t for making a difference in the lives of their clients, the adviser experience in the current climate would have forced out way more than have already left.

I attended the ifa Client Experience Workshop in Melbourne, where some of the best names in the industry were presenting on how to focus on the client experience, to provide quality advice and to keep moving forward with doing what advisers do best, despite the challenges.

ifa research (Client Experience Survey 2019) shows that the client experience varies greatly, and their understanding of fees, what fees are for, and whether the value is there is something that needs work. And while the survey revealed that 94 per cent of advice clients are satisfied, and 95 per cent trust their adviser, 53 per cent do not have definitive loyalty.

I recently stopped providing advice, and saw a gap in the understanding of the clients who have not yet entered the advice process (but want to) and also in some of those who have had advice. I have set up a new business navigating, translating and reviewing advice for clients – Insider Out.

My goal is to help more people relax into their advice in order to benefit from it. And to help advisers have easier and more productive relationships with their clients. But I am seeing some issues that explain why the clients and possibly the legislators, referral partners and ASIC have misunderstandings around advice.

The information from the presenters made a lot of sense. Do a bit extra, meet their needs, solve their problems, provide and explain the value, communicate well, be innovative.

However, it seems a lot of the advice I am seeing is not doing any of these things. The need being met (only sometimes!) is to tick some compliance boxes. The advice being provided is not personalised, doesn’t solve problems, doesn’t explain fees appropriately, doesn’t always even provide strategies, is certainly not communicative or innovative, and does not always provide value or really anything to meet my criteria of advice other than having the word “advice” in the title ‘statement of advice’.

Importantly, the advice I am being asked to provide opinions on is more likely to be advice that is not great. If it was, the clients would be way less likely to seek me out. It is also recognised that not all advice is in a statement of advice. However, I also interview the clients, and the ones I am talking to are confused, feel ripped off, and have no idea what they have received. They certainly don’t feel their problems are being solved or that they have gained value.

I am seeing documents and advice that have no correlation to the reason the clients went to the adviser in the first place. The templated documents are barely personalised, and often filled with things that do not relate to the clients in question. The strategies are confusing and do not show evidence of research or outcomes. I have yet to review a report that includes projections to show the client the difference to their future that the advice should make to them.

With experience I can often see what the advice is trying to achieve, however most documents include very few or no reasons at all for the recommendations.

They are just a “do this, do that because I said so” piece of jargonised paper, that usually ends with large numbers that are being charged.

So, here are my suggestions based on client feedback and experience to help you have happier, more loyal, referring clients:

1. Tick every compliance box you have to so you can keep working (sigh – I know right?).

BUT

2. Ask the client what they want, explain how you are giving it to them and make at least a small part of your SoA and advice mean something to the client.

What is the difference between the advice practices that are highly profitable, attract and retain staff, have client waiting lists, many referrals and are still growing despite the hard times? And those that are struggling with fees, losing clients, chasing leads, tearing their hair out and not enjoying what they do at all?
It is obviously way more complex than this... but it is not just fintech, it is not just efficiency, it is not just processes, and it is certainly not just luck.

The clients I speak to are not telling me they want obviously templated documents, and pages and pages of information on portfolio construction and super legislation information, with fees listed at the back and mumbled by the adviser as an embarrassed aside.

They want to retire comfortably, or protect their families, or buy a home, or help their children, or make sure their parents are safe in aged care.

If your advice (and advice document) does not have some information in there around the compliance that explains in plain English how you are meeting those needs for your client then your fees WILL become a problem.

But, if you have actually solved the client’s problems, instead of just those of the compliance manager, ASIC, your licensee, or yourself, then your fees will be way less of an issue.

As a simple example, a client comes to you with $200,000 of excess cash, from the sale of a business, a property, an inheritance, a redundancy (or whatever).

Their problem is not whether to invest in super/cash/shares or ETFs.

Their problem is that they know that money has to last, they worked hard for it, they don’t want to waste it, they need to retire on it, they want to leave it to their kids. They want it to work for them and produce results.

So, if your recommendation is to invest some in super, some in managed funds, and some in cash, you have not solved the problem. Until you explain what the outcome will be, how long it should last, and what the difference will be to their particular goal, you have not provided advice.

All of the ifa speakers were correct. Fees are not a problem if you provide value for them.

How do I know this? Because some of your clients are paying me fees to solve problems that some of you are not.

And I am not seeing the clients from the practices I mentioned first above. Because they are already solving their clients’ problems, and enjoying their hard work by focusing on the client experience.

Melinda Houghton is a retired financial adviser and the founder of Insider Out.