A study conducted by U.S. based adviser coaching firm Carson Group shows that explaining adviser compensation structure had a positive impact on client satisfaction.
Around 64% advisers felt it had a positive impact, 30% felt it had no impact while the remaining 6% advisers felt it had a negative impact. The same question was asked to investors and 55% of them believed that it is extremely important to know how their adviser is compensated. Interestingly, the importance of knowing how the adviser is compensated increased as client assets with the adviser went up.
This shows that transparency on fee structure is essential.
Clients are unaware about fiduciary advisers
This survey showed that many clients did not know what fiduciary means. Thus, advisers need to educate investors about what fiduciary means and how it benefits them. In India, SEBI Registered Investment Advisers adhere to fiduciary standard.
Client engagement is beneficial
The survey shows that if advisers engage with a client more than four times a year then clients are more likely to be confident and satisfied with the value add offered by advisers. On the other hand, investors do not feel advisers value proposition is met if the adviser interacts with them only once a year.
The key learning from this is that advisers need to be in touch with clients, whether through phone calls, in-person meetings, video calls, or any other mode more often to communicate their value add.
Client education
The survey also revealed that advisers who educate clients on managing their investments are more satisfied with the adviser. Also, investors consider the knowledge of advisers as an important factor.
Financial plan
Clients who worked with an adviser and had a written financial plan felt highly confident about their retirement. Also, clients who have a formal plan are more likely to refer. Thus, following a goal-based approach with a well chalked out financial plan is vital in gaining client confidence.
Checking portfolio
Clients who check their investments more than four times a year are less likely to believe they get value from their adviser.
To sum up, acting in client interest, educating investors, acquiring and upgrading skills and being transparent are some of the most essential factors in building a sustainable and future-ready practice.
