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The latest ING DIRECT Financial Wellbeing Index (Q4, 2013) shows that 1 in 5 people are serious about improving their financial position in 2014, yet conversely only 1 in 10 of those surveyed say they’ve thought about approaching a professional financial adviser to help them do so.
And there lies the challenge for those in the financial planning industry – the appetite is there, but how to do you educate consumers on the value of obtaining tailored, financial advice? The answer, I believe, is through a combination of customer advocacy and a holistic, long term approach to financial planning.
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The broker industry actually exemplifies the potential here quite well. A decade ago, I’m not sure that consumers completely understood and appreciated the broker value proposition; now the value that consumers place on their brokers has allowed the industry to grow substantially. Around 50% of buyers now prefer to secure a home loan via the services of a broker and they are increasingly viewed as trusted advisers. The question is, how do you capitalise on this?
What we’re starting to see now in the industry is forward- thinking intermediaries viewing every encounter as the start of a long term relationship. In many cases, the first time many people seek out financial advice is when they need a home loan. The reality is that once a home buyer has secured a mortgage, they don’t consider how else their adviser can help them – at least until the customer wants to buy a new place, potentially many years down the track. But, how about if that first encounter was treated as an opportunity to educate people on other aspects of their finances - superannuation, for example?
We’ve seen over the past few years how consumers are becoming more proactive in managing their money; they’re seeking more control, more transparency and want to take steps to protect their assets. And building a diverse portfolio – one that incorporates for example cash, shares, and property - plays a huge part in this. But superannuation is one area where engagement is still lacking.
One of the most compelling arguments in favour of better consumer education around retirement savings is the ambiguity that perpetuates around how much is ‘enough’ for retirement. According to the FSC/ING DIRECT report into consumer attitudes towards superannuation (2013), it’s the lack of knowledge around retirement planning that appears to be the main inhibitor to progress. There seems to be real confusion around how to decipher the information they have available, and how to apply it to improve their situation.
Understandably, it’s only as people start to get older and approach retirement that their level of engagement with superannuation starts to increase. But imagine the potential for the adviser-client relationship, and the client’s financial wellbeing, if they were engaged in long term financial planning at the “mortgage stage” of their lifecycle (i.e. early on)?
Advisers intent on building a sustainable business should be striving for personal recommendations and referrals from their clients this year. If you’re wondering how to approach this with your clients, then you needn’t worry – it will be the natural outcome of providing them with tailored, quality advice which delivers long term value. Gone are the days when traditional advertising was taken at face- value, nowadays people are making decisions based on the personal experiences of their peers.
Use the opportunity to advocate financial wellbeing for your current clients, and they in turn will advocate for you.
