Financial advisor coach Tony Vidler, debates what it means to be a good advisor, and how to demonstrate this to the public:
Recently I came across an interesting graph that highlighted the fact that most consumers cannot tell a good advisor from a bad one. We have a job to do as individual advisors in differentiating ourselves to begin with, however we also need to consider as a profession, how we portray ourselves to members of the public.
Lifting technical education, and advisor qualifications, and enshrining certain terminology in law, or lifting the fiduciary standards are all excellent and necessary steps on the path to professionalism.
Simultaneously however, there is another issue which is far more fundamental to how we do business.
So here is the damned good advice: we have to educate the public on what a good advisor is to begin with, because right now they clearly do not know what it is.
Apart from the alarming proportions of consumers who simply cannot tell the difference between good or bad advisors…more stunning is that despite all the regulatory changes and lifting of standards across the entire industry, consumers are actually finding it harder to tell the difference today.
Clearly the lifting of standards and regulatory standards has not made it easier for consumers as yet, though I have no doubt they will do so in time. So the onus is upon the industry itself to help consumers get a better understanding if we want them to engage with good advisers.
So what IS a good adviser?
Most articles you google will tell you that a good advisor is someone who miraculously negates all potential conflicts of interest and divorcees themselves entirely from bias.
Does that human actually exist?
The mood of the moment globally is that the “good advisor” is one who operates to a fiduciary standard which even our lawmakers do not have to aspire to. Because it is an easy conclusion to draw, the evolving school of thought is that a good advisor is one who uses a single remuneration method – one must be 100% fee-based.
As an industry we are leaning far too heavily towards describing a good advisor simply on the grounds of their remuneration method. Sure we talk about technical competency, and professional designations and duty of care obligations too…but every discussion reverts to the mean: good = fee-based.
Well I have a financial advisor who doesn’t charge me fees, and I think she is very good. I am always 100% aware of what she is making from any engagement, or what she is paid for her on-going advice and service. I am always 100% aware of her commercial relationships or areas for potential bias.
For more of the report's findings continue to p.2