Trust me – I’m a financial planner
Trust me – I’m a financial planner
If someone’s primary source of knowledge of financial planning is what they’ve seen and heard during the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, then understandably most people wouldn’t want to touch advisers or financial advice with a bargepole.
Restoring the public’s faith in advisers and what they do has suddenly become an issue of monumental importance. An industry that wants to be trusted as a profession faces the urgent task of convincing the public it can be trusted like one.
This is not to excuse for a moment the issues and the misconduct the inquiry identified. And we should remember that the practices the inquiry has focused on aren’t confined exclusively to those organisations that appeared.
But it does mean that in the absence of other sources of information, casual observers of the inquiry will have been left with a deeply misguided idea of what the industry does and how it works.
It’s a little bit like if the daily news were your only source of information about airlines. You could conclude that all they do is crash, serve bad food, and drag passengers off their planes (and break passengers’ guitars), because that’s all you ever read (or sing) about. We know that’s not true.
But we know that either because we’ve experienced an airline flight ourselves (and survived) or we know someone who has. It’s remarkable how much your perception of something changes through personal contact. It’s why, even though financial planners are not a highly trusted cohort (at the end of last year Roy Morgan Research said only 25 per cent of Australians rate planners “high” or “very high” for ethics and honesty, a level largely unchanged for almost a decade), the vast majority of people who have an advice relationship value it highly, are better off for it, and trust their adviser.
CoreData Research principal and founder Andrew Inwood says trust is made up of four components – benevolence, competence, control and authenticity – that overlap and interact in a relationship. If a client experiences each of those qualities in a relationship with an adviser, they are more likely to feel a high level of trust in that adviser.
Full disclosure: when I’m not writing for No More Practice Education, I work with Inwood at CoreData, and I know the issue of trust – how to create it, how to maintain it – is currently a hot topic.
In a healthy, trustful relationship between adviser and client, the client believes the adviser is working in their best interests and is skilled at what they do; knows what elements of the advice environment the adviser can control; and believes the adviser is really who they say they are.
Inwood says the Royal Commission potentially undermines trust in advice and in advisers because the organisations that have appeared at the inquiry clearly have not been acting in their clients’ and customers’ best interests, they appear to be (at best) incompetent, have poor control over systems, and their actions and words have revealed them to be completely inauthentic.
So it makes sense that to establish or rebuild trust with clients, and the public at large, advisers need to consistently and demonstrably live up to those four aspects of a relationship. Translating them into practical, tangible action is a bit less straightforward. You can’t just say, “Trust me!”. In this article, Inwood suggests five clear, simple steps to start the process and reinforce trust with clients.
The Royal Commission provided a valuable insight into some of the worst practices of financial planners and financial planning licensees, and it’s to be hoped its interim report in September and its final report next February provide some constructive recommendations on how to prevent them happening again.
But the task all advisers face, individually and as a collective, is to prove that they are worthy of public trust and respect, independently of any of the inquiry’s recommendations.
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