It’s A Relationship Thing

The event of the Australian financial advice industry begins in earnest this week with the national conference for financial planners kicking off in Sydney tomorrow.

This year the Financial Planning Association of Australia’s National Conference has a heavy emphasis on education and raising standards, yet when the event winds up on Friday a core outcome of the conference has to be an enhanced focus on the end client – the investor.

The provision of financial advice presents a dilemma for planners – on the one hand they need to operate under structures that allow for repeat behaviours and adherence to processes that generate business efficiencies and hopefully profit, yet on the other hand clients are requiring of tailored solutions and personalised services.

What this means is that a heavy focus on technology and automated processes can only take a planner’s business so far because what really matters at the end of the day are the softer skills of advisers in dealing with clients and would-be clients.

The completion of an extensive new shadow shop of the financial advisory industry by burningpants’ consumer research arm in Australia, CoreData, has highlighted that it is the human elements of the advice process that are most highly correlated with the intent of would-be clients to use a planner or recommend a planner to their family and friends.

So while many in the industry harp on about systems and process, these factors (while obviously important in facilitating business operations) have limited impact on the ultimate measure of success – whether a person intends to utilise a planner’s services.

In fact out of 40 factors CoreData assessed in terms of their correlation coefficient in influencing client behaviour, the top 10 most highly correlated were all related to the emotional response of would-be client to the planners.

Therefore dealer groups that attempt to improve the performance of their respective netoworks through tighter management and monitoring of planner adherence to process may find they actually impede advisers in engaging and interactioning with clients and would-be clients in a personal and natural way.

The research showed that in instances when advisers demonstrated a particularly heavy focus on process, would-be clients weren’t able to stike the necessary rapport and build the levels of trust required for them to adopt a planner.

The long and short of it is that clients don’t want to deal with pre-programmed robots who are following a script they want to deal with real people who can empathise with their sitution and clearly relate to their objectives and needs.

Some groups have manged to achieve this through an optimal level of balance between process and the softer skills needed to be a successful financial adviser.

With so many messages likely to come out of this year’s FPA conference, let’s hope this one is included and resonates well into 2008 and beyond.