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Lifeplan Financial Advice Satisfaction Index hits all time high

27 Apr 2014

Lifeplan Funds Management with the University of Adelaide undertakes a survey every six months. It looks at changes in investors’ attitudes towards financial advisers including their perception of their financial adviser’s trust and reliability, technical ability, and investment performance.

The satisfaction index increased to 74.5 per cent, up from 72.3 per cent in October 2013. The April 2014 survey saw an increase of 3 per cent over the October 2013 survey, and an increase of 2.6 per cent over the April 2013 survey.

All three drivers of advocacy – perception of performance, trust and reliability, technical ability - increased since the October 2013 survey. The largest increase among the three drivers of advocacy was for the perception of performance, which increased by 4.13 per cent. The perception of trust and reliability increased by 2.2 per cent, while the perception of adviser technical ability increased by 2.9 per cent.

Mr Matt Walsh, head of Lifeplan, says this improvement in perception is due to better client – adviser relationships.

“Not enough has changed in the domestic and global landscape since the October 2013 survey to move the index this much, but the quality of advice seems to have improved when benchmarked against the capital markets.

“While the domestic equity market index, the ASX200, continued to show gains for the past year of 8 per cent, it has not reached the 2007 levels.

“Despite capital markets not yet achieving pre-GFC levels, the Index and its three drivers are at record levels. This indicates that financial advisers, in an increasing complex and dynamic capital market, are providing value-added services.”

The survey results, on the back of the implementation of FoFA, should also reinforce the Government’s decision to pause any wind back of the reforms.

“Finally after years of reforms and post-GFC recovery, we have record levels of satisfaction with financial advisers, and that should be celebrated and built upon.  A wind back could raise the ogre of commissions again which can work against the public’s confidence in financial advisers.”

In line with previous survey findings, female investors continue to show a higher level of perception regarding their financial advisers, across all three attributes, than male investors. Nevertheless, the survey found that male investors showed a very strong increase in all three drivers of perception over the period.

“Overall, investors in the 30-44 age bracket showed the strongest increase in all three drivers of perception, and now have the same or higher levels as investors in the 45-60 age group.

“This group assess the level of trust and reliability as lower than older group. This is expected as they have had shorter duration with their current financial adviser, and as the client-adviser relationship continues there will be an improvement in the level of this driver.

“Financial advisers should remain particularly vigilant with clients early in the advice relationship, as trust takes time to build and should not be taken for granted,” says Mr Walsh.

“Investors in the 45-60 year age group seem most satisfied with the quality of advice they are receiving, and this group seems to be most affected by the technical abilities of their financial adviser, as well as the performance due to financial advice.

“As the advice relationship seasons, clients become more financially literate and have a better understanding of the long term benefits and outcomes of the planning relationship.  Planning is rarely about quick fixes or the short term”.

“Financial dvisers need to maintain a high level of technical ability to satisfy these older individuals with markedly higher levels of financial literacy,” Mr Walsh concluded.

Lifeplan Funds Management is a specialist business of Australian Unity Investments. It is the market leader in investment and funeral bonds, and leading provider of education investment funds.

The Lifeplan ICFS Financial Advice Satisfaction Index was established in 2007 and is a tool for financial advisers that want to improve their levels of client service. It is based on academic research that models the factors that explain a client’s willingness to recommend their financial adviser to a friend or acquaintance.

The research also analyses how investors’ age, levels of investment and length of their relationship with their adviser impact these attributes. It is sponsored by Lifeplan Funds Management and conducted every six months by the University of Adelaide’s International Centre for Financial Services.

The survey of 403 investors who use financial advisers was undertaken in March 2014 by the University of Adelaide’s International Centre for Financial Services (ICFS) for Lifeplan, and sought feedback about the performance, trust and reliability, and technical ability of their financial adviser.

For more information please contact:

Matt Walsh

Head of Lifeplan

Phone: 0418 113 878


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