Your Company Needs You!
Financial services companies spend an obscene amount of money every year on branding yet when it comes to financial advice the only brand most consumers are aware of is that of their adviser.
Consumers it would appear are almost blind to the various dealer group and funds management brands in the market yet strongly aware of the brand of their adviser.
One of the reasons for establishing burningpants was to provide a channel for bringing to life some of the surplus data generated by its affiliated businesses in Australia and overseas.
The information stems from conducting relentless cycles of financial services questionnaires, focus groups, deep dives and industry forums.
In this instance a piece of research in Australia that was designed to assess the efficiency of various product disclosure statements (PDS’s), information memorandums and literature of some of the nation’s financial groups resulted in being able to enumerate three very interesting things.
The first piece of insight to emerge was that just under a third of investors who attended fifteen focus groups on the subject had changed their master trust provider within the preceding three years, a sample (around 100) too small to be anything but indicative but interesting none the less.
Why had they changed? Well for a very simple reason; because their adviser told them to.
Trust in the adviser on where their money is housed and administered it appears is absolute.
In all cases they stated their adviser had contacted them and told them he/she had found them a better deal and recommended they change platform – all of them changed.
Another interesting insight from this piece of research was that less than one in five of the people who had signed a prospectus, a PDS or for that matter a mortgage contract had actually read it.
Why don’t they read the documents? Because, that’s what they pay their adviser for.
Trust in where the money is invested – at least in the currently benign investment environment – is passed to the adviser (note this is only for people who have advisers, for the rest of the population it’s a different story).
The third and probably most interesting insight to emerge from the research was that only about a quarter of the focus group attendees knew the name of their adviser’s dealer group.
They were in the main convinced their adviser was self-employed and as far as they were aware had no dealer group relationship. Almost all of them were extremely happy with their relationship with their financial planner.
However, the nub of this for the industry is that the consumers appear to have absolutely no relationship with the dealer group – or in the case of the manufacturers, the fund manager.
This appears to indicate that the best marketing dollars a dealer group can therefore spend – might not be on building its own brand – but on helping its planners to build their brands and to segment, understand and penetrate the market better?
3 Comments on “Your Company Needs You!”
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GP says:
Whilst this article reinforces many of the current perceptions it falls short on actually considering what actually clients might want in the bigger picture.
Interestingly, the law provides for advice to be delivered by a licensee (ie not an unlicensed adviser direct, this is why they/we are called authorised representatives)and thus those clients who could not recall their dealer group name must be provided advice by advisers who are not correctly discharging their basic fiduciary responsibility of ensuring the client undertstands the FSG.
Secondly, it is very interesting that clients who suffer loss due to adviser negligence always seem to locate the name of the licensee, and the advisers are usually extremely quick at getting out of the way and blaming their licensee for failure to train, support etc etc. They usually then pop up down the road to open up again and off we go again.
I would suggest that not only is more money needed to educate an uninformed consumer and media but also the industry researchers needs to really ask clients the right questions. eg Do they look for more than one aspect (ie the trusted adviser)and these just might include… recourse to a licensee who either holds a quality PI policy, or has a balance sheet to support the sustainability of it’s ongoing operation and obligations, and/or has a Brand where the reputational risk is endorsed by a larger shareholder.
Independence versus impartiality has a cost and it’s a big one when you consider that many of the clients who have lost thousands/millions in Westpoint and others were dealing with disreputable small operators who have neither a brand, research competency, or anyone (compliance) overseeing their ineffective $2 companies.
David says:
While this is not new information, it’s good to see it confirmed yet again. Most mature advisers have long preferred to minimise a client’s awareness of their licensee. This strengthens their relationship with the client and reduces the risk to the adviser from the dealers “brand” being sullied by the actions of incompetent or fraudulent advisers in the same network.
It’s also not surprising there is a trend for mature advisers to leave their “brand name” licensee and acquire their own licence – it’s typically a lot better for them financially and in many other ways too.
David says:
I have been convinced for many years that clients do not know, want to know or even care who the licensee is that their adviser is an authorised representative of.
Yet in the past, ASIC and other regulators insisted that an adviser must not “appear as being a licensee” and provide information that they are an authorised representative of a dealer group, to the extent that they are not allowed to promote their own business.
Also, it is very difficult to have the compliance people of the adviser’s dealer group to accept the promotion of the adviser’s business unless they had co-branding of “equal prominence”
Adviser’s have no objection in informing clients that they belong to so and so dealer group, but why is the dealer group so reticent in allowing the adviser to promote his/her business and business name?