Advice client loyalty will dwindle
Financial advisers should be prepared for client loyalty to wane in the coming decades, with endorsements and word of mouth set to be the key to client engagement, according to IOOF.
General manager distribution, Renato Mota, said trust will become an even bigger issue as client loyalty dips, in a period where data security and privacy needs conflict with increasing amounts of personal information available online.
He added that trust would not necessarily emanate from personal experience as clients were likely to make decisions based on word of mouth from friends, colleagues and even strangers online.
The average person spends 1.72 hours each day on social media, which means social networks and ‘likes' will be the new way of advertising.
"The future may also see clients expecting financial advisers to compete for their business. We have seen this model with airfares and hotels," Mota said.
"Now recently launched Australian company, flongle.com.au which gets mortgage providers to bid, through reverse auction, for mortgages, represents the first steps into financial services."
The younger generation not only demands immediacy, they also expect flexibility to access the information they want.
To this end, investment platforms will grow as investors expect to aggregate investments, assets and liabilities.
Wrapping products would have to simultaneously become more sophisticated, while being simple and user friendly.
Mota also said clients will focus on target-oriented results instead of just looking at investment performance alone.
"Clearer risk management and diversification strategies should see multi-asset funds grow. This will also allow financial advisers to focus on their core competencies, including retirement planning, rather than asset allocation," he said.
AUTHOR
Malavika Santhebennur
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