If you could make a list of the biggest challenges facing the advice industry in 2021, rising costs associated with compliance and legislation would likely be near the top.
According to Prominent Financial Services director Christine Swanson, though, there’s a far more important factor in the “price” equation than the issues above, and that’s how to communicate the value of advice – something that’s severely lacking in the broader community. In short: there would be significantly more people seeking advice and far fewer concerns over fees if people understood the value and benefits advice can add.
“Everyone’s perception is their own reality,” she says. “That’s why there’s a huge divide in public perception of advice between those who don’t use an adviser versus those who do.”
One of Christine’s long-term goals is to improve the public perception of financial advice. She’s certainly encountered her fair share of obstacles during her mission - the Royal Commission, the media’s response and the public perception to the various industry scandals that preceded it and so on – but has consistently tried to turn every challenge into an opportunity.
“Those difficult times are actually where an adviser can add enormous value,” she says. “Communication is key – guiding clients through those periods and ensuring they make smart financial decisions can be crucial to achieving long term financial success, if we don’t communicate and educate, people can make the wrong assumptions leading to all sorts of issues.”
She continues: “Going back seven or eight years ago, we were probably one of the few practices that started using video. It was designed to get me in front of clients with the right messages more often, if there’s something in the media - negative publicity, commentary about our industry - I’d jump in front of the camera and decipher the ‘noise’ and let my clients know what we are doing differently.
“It puts their minds at ease; it doesn’t take much to let your clients know that you are on top of everything and it forms deeper relationships.”
This approach of taking any negative media noise - whether it be about advice as a profession or market-related concerns and using it as an opportunity to reassure clients - has yielded tremendous benefits for Christine’s practice in terms of client satisfaction, retention and referrals. She also hopes it assists in the broader project of demonstrating the value of advice to the “un-advised”.
“I actually don’t receive many calls from concerned clients during events like the GFC or COVID,” she says. “They’re not worrying about their portfolios because they’re focused on the bigger picture. We’ve educated them well, kept them informed and provided them with peace of mind. And they understand what they’re hearing in the media is not necessarily related to what’s going on with their portfolios.”
Reflecting this idea, Griffith University Business School’s recent report, The value of professional financial advice for consumers in a crisis, found that “proactive client engagement during the COVID-19 pandemic” led to clients “[feeling] more informed and reassured.” Clients who were engaged in this way were also “observed to panic less and maintain behaviours consistent with their long-term goals, such as investing to take advantage of the downturn.”
Christine adds that this kind of proactive engagement doesn’t just benefit clients; seeing an adviser explaining the challenges of the moment and cutting through the media noise also gives the wider community a better understanding of the value an adviser can provide.
While she concedes nothing can match the actual experience of speaking to an adviser personally, more people should take advantage of the no-obligation first meeting that most practices offer - “They have nothing to lose and everything to gain,” she says - articulating the value of the service is important for any advice business.
“You need to communicate and show real value,” she says. “Cost is only an issue in the absence of value.”
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