Financial advisers – the public perception
The majority of people that use financial advisers rate their relationship positively, with 31% considering it to be ‘excellent’ and 42% ‘good’, according to the latest RaboDirect Financial Confidence Index.
Wednesday, April 27th 2011, 8:05AM 
14 Comments
Overall however, the results of the survey into the public perception of financial services providers makes worrying reading for advisers.
Usage of financial advisers has slipped from 10% to 7% of New Zealanders, and "public confidence in New Zealand's financial services to help them grow and protect their wealth has dipped sharply."
Mike Heath, the RaboDirect general manager, said the overall results should be of concern to advisers.
"For 2009 through to 2010 financial advisers had a net positive confidence measure and that's dropped down to net negative for the first time, so I think the trend is definitely the most alarming thing I'd take away from this."
"If we go back to August 2009 net positive 14, February 2010 it dropped down to net positive 13 but then it jumped to net positive 23 at September 2010, so its kind of bounced around a little bit whereas if you look at banks over the same period confidence consistently increased. Credit unions and building societies dropped off modestly over those periods," he said.
"Out of all the sectors where there was the biggest spring it was definitely in terms of financial advisers over when we first did the survey in August 2009 through to March this year."
Heath said he believed media coverage around finance company collapses had damaged financial advisers.
"People who don't use them picked up on the negative sentiment in the media and comments and experience of the past few years," he said.
The survey included a number of findings with regard to the perception of financial advisers.
Of the respondents, 5% said they had strong confidence in financial advisers, with 19% having confidence. However, 9% strongly disagreed they had confidence in advisers and 13% ‘somewhat disagree.'
When it came to whether people considered fees reasonable for the advice provided, only 2% strongly agreed, with 16% ‘somewhat agreeing.'
The largest percentages, both at 30%, either didn't know or neither agreed or disagreed, while 7% strongly disagreed adviser fees were reasonable.
The survey also broke down questions of integrity, fees and confidence across those who currently use a financial adviser, lapsed users and those who had never used an adviser.
In a plus for the industry, in each case those using an adviser ranked them more positively.
On integrity, 57% of current users believed advisers acted with fairness and integrity, falling to 41% for lapsed users and 20% for those who had never used an adviser.
The highest score, at 69%, was from current users agreeing advisers provided good information to help make investment decisions.
The lowest score among users was on whether fees are reasonable, with 49% agreeing.
Health said he believes the new regulatory environment will improve the public perception of the wider financial services sector and advisers.
The September 2010 Confidence Index found 30% ‘agree' and 4% ‘strongly agree' that the financial services market would be better regulated in three years time.
"I think the regulations will help. It just shows there's some more rigour and structure around the industry. I think that's definitely going to help boost confidence."
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Comments from our readers
i've suggested to simon power for advisors to use the appropriate designation on their name cards, where every man in the street will know exactly what services one advices. Example:
- (name) insurance/risks (life & health) advisor/broker
- (name) investment advisor
- (name) financial planner
- (name) risks & mortgage broker
etc, etc, etc.
the term "financial advisor/planner" should not be used by anyone, except a qualified & registered financial planner.
i've mentioned before, i suspect the people who set up the regulations understand very little or nothing about financial planning.
What do you call a guy that does Risk and Kiwsaver only? What about the Mortgage and Risk only adviser? what about the F&G, Mortgage and Risk girl?
They are all types of 'Financial Advisers' which is why we use that term.
Ps Its very easy to tell a successful financial advisor, they are the ones that don't answer the phone because they have retired on the fortune they made by self advising.
A friend-of-a-friend recently quizzed me very extensively on KiwiSaver and then went into all kinds of other areas. I told him that we were straying into "personal" advice territory and asked him if he had a financial adviser.
He smiled broadly and replied that he did have an adviser and declared that he was a "bloody genius" when it came to money. There's nothing he doesn't know.
The adviser had simply told him that KiwiSaver was a mug's game. He then told me that all of the adviser's property investments had tanked and the adviser was now bankrupt. But he remains a great bloke - and, again, a bloody genius when it comes to money.
We still have a mountain to climb here.
The terminology is simply that determined by the various government departments to capture their intended market when drafting legislation. It is akin to writing legislation to cover the retail sector and simply labelling every market provider in that space a "retailer". The terminology is appropriate in that context.
"Financial Adviser" is a generic term used to describe a section of an industry - it is absolutely intended to capture a wide range of market partcipants - and then within the context of the legislation tell those participants what is expected of them legally. What is the issue with that?
No rational person would probably expect the term "financial adviser" to accurately describe any individual's business focus, particular expertise or qualifications/credibility. Certainly any financial adviser that has any marketing ability wouldn't settle for the term when describing themselves to their target market. It is a lawmakers phrase that happens to work for all the market participants to identify who is playing in this particular sandpit.
From a marketing perspective it is meaningless. From a consumers perspective it is at best a broad brush description of the "general" field that a person operates in.
...it does however mean something to regulators and authorities....
it is not unusual for me to be wrong, generally I keep it to about a dozen wrong'uns a day though.
What's wrong on this one though?
From a marketing sense the govt is using the word financial adviser to loop us together and they use that in the public field.
So rational thinker or not when the govt is linking everybody under financial adviser and marketing as such it proves more and more difficult for the industry to remedy the issue of underinsurance.
So the argument you propose holds true only if the government labelling is allowed to stand uncontested by advisers individually or the wider industry. If that happens then we deserve to be misunderstood.
If we as an industry cannot address our own marketing issues and explain our role and functions adequately to consumers, then does it really matter if a regulator applies some generic phrase blandly to all?
A different way of looking at it perhaps is to consider the similarities between the armed forces recruitment and development strategies successfully proven for a thousand years across myriad cultures, and what happens with any imposed major reform in a segment of society.
In its simplest terms, the strategy is to first strip away the aberrant behaviour and oddballs, and create a very basic level of uniformity and commonality. Biff out the idiots, shave the heads of whoever is left and make them all dress the same and do silly things. That eliminates egotistical individualism, and builds community and common standards.
From there individual skills, positioning and expertise are built. Ultimately you have a body of people who all share common values, common beliefs and standards, but who have the ability to specialise and build on areas of strength - and in fact attain their own branding within the world of uniforms. Airwings, submariner badges, unit badges and uniform variations of all sorts coupled with individual recognition in the form of rank and medals combine to allow uniqueness within the conformity.
As a method of creating common professional standards and unity from a wide cross section of society it is an unparallelled development system.
Perhaps that is the thinking of regulators. Or perhaps I give too much credit to the rationale, but the net effect could be the same if the industry recognised the opportunity that is presented from creating standardisation in the first place.
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I am a financial adviser (waiting for my authorisation) and over the last few months, have been quizzing my clients on their awareness of the above. To date I have yet to find one who is aware of anything! Other than their knowing I have to give them a Disclosure statement (I'm up to V29!!) because I tell them, their ignorance is bliss! When will the Sec Com or whoever start some REAL publicity on all the requirments we have to follow?