Inconsequential Independence
If you are a financial planner and you are reading this, we’ve got some interesting news for you: No one gives a flying frog’s fat behind who your licensee is. They don’t really know what a licensee does and they don’t much care.
At CoreData we survey thousands of people, run thousands of mystery shopping events and speak individually to hundreds of people through focus groups, in-depth interviews and phone-based research.
For the past week we have been in the process of putting together the framework for this quarter’s White Paper and as a part of this spent three solid days interviewing consumers last week – those who have embraced financial planning, those who have rejected it and those who use it in a sporadic way.
We were searching for a number of things from these interviews, but from the hours and hours of video that was gathered we were struck by one curious thing: none of the clients who had a financial adviser ever mentioned who their adviser was licensed through. Not one.
To be honest that’s not entirely true; one of the interviewees – a very savvy 74 year old female investor – mentioned the adviser’s licensee obliquely – as the group that her adviser got his insurances through. That was it.
This struck us as curious because recently, when involved with an open debate with a group of planners, the concept of independence was really front of mind.
The planners in the room saw the fact that they had a licensee that was prominent in their marketing material as a barrier to being able to properly advise a client.
On further digging, it became clear that the real barrier they were experiencing was that their relationship with their licensee restricted them to using a single platform provider (not a single platform we hasten to add but a single platform provider).
In the debate we drilled into what this meant to the clients: Was the platform more expensive for clients? (No, as it turned out)
Harder for the planner to use? (No – what they liked about the platform was that they found it easy and that the service staff were excellent)
Were there investment opportunities that they thought they were missing? (No)
Did the platform have poor reporting? (Again, the answer was no).
At the end of more than an hour of debate on this topic it became clear that the core issue with the platform was the way in which it was badged. Planners felt that because it had the same brand as the licensee they were operating under that they were participating in a type of mis-selling and that they felt awkward about the sale.
Yesterday we went through some of the tapes again, looking for the points where interviewees were asked about who owned the planning business they were using, what products they had, what services they used, what they liked and didn’t like about the reporting and the review process, why they had rejected planning or why they used it sporadically.
None of the people had rejected planning because of a licensee, (or interestingly because of price); none thought that their planner was owned by the licensee; and none – not one – of the interviewees knew which platform they were on.
This article is not designed to denigrate the licensee brands that are out there – at a time when new customers are seeking security above all else the role of a strong licensee brand remains important.
But critically, those people that become your customers are choosing you as an individual, choosing to adopt the services and the offer that you are making and it appears at least from the latest round of research that we have done that once they become your customer, the concept of licensee brand almost entirely evaporates.
This means two critical things: from the customer’s perspective, independence isn’t an issue of who you as an adviser buy services from – it’s an issue that is based around your behaviours and your desire to act in a customer’s best interest.
And perhaps just as interestingly – when the relationship with you as an individual becomes strong, the licensee brand becomes invisible.
2 Comments on “Inconsequential Independence”
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Matt Ross says:
Don’t you think it’s about time people did start giving a frog’s fart about who is pulling the strings in the background?
By not taking any notice…it’s getting them into trouble because they’re accepting conflicted advice.
This isn’t anything new…
David says:
As I see it, for many years the regulators and licensees themselves have had the opinion that the Authorised Representative’s licensee is important to the client.
Some years ago when licensees insisted on equal prominence on anything included in the adviser’s letterhead or business card, I had a major battle with my licensee at that time (A major bank owned dealership)when I insisted that I wanted to promote my business, not the licensee.
Not only that, I read recently that when an adviser changed her licensee and her client’s sign an transfer authorisation letter, the old licensee still refused to transfer the clients!
These people need to understand that to put it as Burning Pants states;
“No one gives a flying frog’s fat behind who your licensee is. They don’t really know what a licensee does and they don’t much care.”
Clients deal with advisers, not licensees. Governments trying to implement new regulations and restrictions on advisers is doomed to failure no matter how much they think what they are doing is good and protective. Why? Because clients deal with advisers who have the client’s best interest at heart, provide good advice and assimilate well with the client.