Understanding the Value of Advice
12 February 2019 | Practice Management
Alex Cole: Helping clients understand the value of advice. The Vanguard 2018 U.K. Advisor Client Survey contacted 300 advisors and a thousand advised clients. One of the central findings of our survey rates what we have called the Perception Gap.
My name is Alex Cole, and I have with me today Georgina Yarwood, an Investment Strategist specialising in researching financial advice.
Georgina, can you explain what we mean by the Perception Gap?
Georgina Yarwood: So we looked at a variety of advisory services and we found that there appears to be a distinct gap between those services that clients report actually receiving from their advisor and those that we know advisors are delivering.
Alex Cole: Do we have an example of that?
Georgina Yarwood: Yes, a prime example of this would be risk profiling, so only 43% of the clients that we surveyed said their advisor had assessed their attitude to risk.
Alex Cole: 43%, how can this be true? We know that all advisors risk profile their clients, right?
Georgina Yarwood: Well, exactly, and we don't think it is a case that advisors aren't providing these services. Actually, we see this not as an issue of delivery, but rather one of communication, so what we suspect is that what advisors are saying or think they are saying might not necessarily be what their clients are hearing. From many of the advisors we work with, we understand that it has been somewhat of a priority to streamline the advisory process and make things much easier for their clients, but we are now questioning whether they might have taken this too far and made things too easy. Have advisors become so good at simplifying the advice process that clients no longer understand all of the hard work going on in the background?
Alex Cole: And is this perception gap typical in the advisor/client relationship across all advisors?
Georgina Yarwood: Well, it appears to be, so we looked at a variety of services here and you can see that clients rate most of them as important and sort of get a lot of value from that, but actually when you overlay that with their delivery scores, you can see clients really aren't feeling that value.
Alex Cole: Thank you, Georgina. This lack of clarity presents a fundamental challenge when it comes to articulating your value as a financial advisor. Finding ways to communicate more effectively and with greater transparency around the services that you offer your clients will be key to closing this gap. To learn more, be sure to register y our interested in our Advantage of Advice workshops.
Thank you for watching.
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