Scandalous headline culture changing advice
Coverage of the Commonwealth Bank (CBA) planning saga has clients believing the events happened "yesterday", placing increasing pressure on advisers to justify their value proposition and rigorously walk clients through their process.
Such is the belief of wealth advisory Noall & Co managing director, Mark Bineham, who said he has had to explain to nearly all of his clients that the incidents that led to the bank entering an enforceable undertaking actually happened years ago.
Bineham said there is significant pressure on advisers to justify their value proposition to an increasingly-informed client base, who scrutinise their performance based on what they hear in the media.
"If I had mentioned the Future of Financial Advice reforms to clients a year ago, maybe one in ten would have read about it in the Financial Review."
"Now, a year later, you've got everyone asking about it. Everyone every client asking about the CBA," he said.
However, he said despite their increased interest in the industry, the scrutiny often descends from misinformation.
"They just see headlines about CBA advisers and CBA apologising and they assume this is now and that's fair enough, I can understand their point of view," Bineham said.
"Confusion's the main problem and they just basically want to get cleared up ‘what's it's all about' because they are reading a lot of confusing stories in the media. Most don't realise that this is from seven years ago. They think this is recent."
Bineham said one of the consequences is clients what to stay clued up about every step of the advisers process, to ensure they are getting a good deal.
He said the trust in the profession has waned.
"Clients will start to question everything you do and unless you have a very good value proposition and are easily able to hand that out, then the days of the adviser saying ‘oh I'm a good bloke, I am doing the right thing by you, trust me' are behind us.
"Clients expect more. They really want to see what your credentials are, they want to see what education you've done, they want to see what they're receiving for their fees," he said.
Bineham encouraged advisers to have frank conversations with clients about the issues that have dominated the headlines and how the landscape is different to regain their trust.
"It takes me no more than a couple of minutes to explain what happened, what's been done about it and when the media says that 80 per cent of all advisers are bank-owned, you need to differentiate between a small business person whose licensee is owned by a bank, but offers totally independent advice, compared to someone who is a salaried employee with Westpac," he said
"Once they understand that, then they're fine."
Recommended for you
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
