Consumer suspicion hamper industry growth

Consumer suspicion hamper industry growth

Consumer suspicion hamper industry growth The perceived cost of financial advice is the main factor discouraging consumers from seeing a wealth manager, and consumers have unrealistic expectations about the price they can expect to pay for advice, according to research released by Old Mutual Wealth this week.
 
The research took place in the UK market, but the findings will have familiar echoes around the globe. According to the survey of 1,400 UK adults, 37% said that ‘the cost of getting advice’ was an issue that put them off seeing a financial adviser.
 
When asked what they would be prepared to pay for advice, 44% said that they would not be prepared to pay a fee. A third said they were unsure and 15% said they would pay only up to £250 (US$380). Indeed, 31% said they feared ‘paying for something they didn’t need’ and 15% weren’t convinced an adviser could offer value.
 
There were some findings that will chime with the wealth advice market in Canada, the US and Australia too, specifically that 19% of respondents were unsure which advisers to trust and 30% said they believed advisers may be biased toward some products.
 
A report on Wealth Professional last week highlighted concerns over  transparency of fees and the performance of client investments. In Canada the implementation of CRM2, which is to be completed by July 2016, is designed to shine a light on all wealth management businesses and enhance transparency.
 
Speaking to Wealth Professional, Kathy Waite, who describes herself as an unbiased fee-only financial planner, operating as Your Net Worth Manager, agrees that consumers are overwhelmed by jargon, perhaps deliberately, and have no idea how to evaluate performance of their accounts to the market.
 
Waite said that there is an element of bias at play, of course banks would be expected to push their own products, but there is also a more hidden side to the industry concerning 'independent' advisors offering products from mutual fund dealers that have their own products. This means that representatives would be incentivized to sell in-house products, making them less independent.
2 Comments
  • Mike Gentile 2015-10-27 3:19:24 PM
    It seems that virtually every one has an opinion about advice, biased or unbiased and I am no exception. In regards to Ms Waites opinion that independent advisors are less independent or more biased the she is, how is she able to conclude this. I have numerous wholesalers knocking on my door to recommend their products. We have a process and it has nothing to do with incentives and everything to do with the quality and the performance of the investment offering. If the fund, the manager and the risk profile don't meet our performance criteria it doesn't get on our list . So in essence that is our bias, not the incentive referred to. Our primary concern is that the customer gets good value and quality advice at the right price. On that note I believe that I am speaking for the majority of advisors.
    Post a reply
  • kathy Waite Your Net Worth Manager 2015-10-29 10:47:24 AM
    I conclude this from having worked in a system until 2011 whereby your insurance sponsor and your mutual fund dealer indoctrinates young trainees, the asset allocation software they are given miraculously suggests their own funds not just an allocation to be filled. They offer more commission or extra incentives for selling their own brand. I am not saying all firms do this but people bring me their statements for second opinions and I know the product on that statement is frequently own brand from their dealer and the rep has picked from dealers menu.( lazy ) Mikes clients are obviously fortunate. Sunlife guys have CI products , Quadrus guys have Quadrus product, IPC have their own i could go on. Thats life go to Ford get a Ford . Got to the Bank don't be surprised RBC sell you RBC. However put independent above your door or call your self Harry Smith Financial and you are not making it clear there could be a bias. People should look at the big business name on the top of the KYC forms and see who is pulling the strings
    Post a reply