At an Aviva roundtable on the future of financial advice yesterday the Association of Mortgage Intermediaries director said: “The IFA industry is not well thought of – consumers don’t like us. Perhaps on an individual level they value their relationship with their IFA, but collectively we are not well liked by the public.”
Sinclair’s comments were provoked by Aviva research showing that 51% of intermediaries feel the most common negative perception affecting their industry is the belief that financial advice is never truly independent. Some 41% feel that customers do not think fee structures are transparent enough.
At the same time, 83% of advisers believe that their customers place most value on personal relationships. But 58% of advisers surveyed by Aviva believe their customers will think financial advice is too expensive in the future, and 56% believe that customers will find it hard to see value for money.
Sinclair said raising minimum qualification standards across the industry would improve consumer trust of the profession but said it is imperative that IFAs overcome the perception that advice has no value during the transition to charging for advice, part of the Retail Distribution Review.
Simon Badley, director of intermediary at Aviva who hosted the debate, said the way to achieve this was to show consumers the value of advice in a tangible format.
Sinclair said: “Customers who get financial advice on average see a 60% increase in their net assets by the age of 60. That’s achieved through better management of debt, improved budgeting and better selection of products.
“They also see a four-fold increase in their pension fund at retirement and can half their debt in just two years by taking advice. The average consumer can increase their consumption by £50,000 over their lifetime by taking financial advice.
“These are tangible benefits of advice and go some way to showing the public why it’s worth paying for it.”
Fay Goddard, chief executive of the Personal Finance Society, was also at the roundtable and added: “It’s probably one of the failures of the advice community that it is still not communicating what advisers do behind the scenes for their clients. We need to help people understand what results from advice will improve their life long-term.”
Aviva’s research also said 64% of advisers believe that clients will be deterred from paying explicitly for full financial advice because of the common misconception that it was ‘free’ before.
And 44% of intermediaries believe that people are less likely to pay fees for advice because they feel they can get enough information online to make informed decisions about their financial future.
But Simon Badley said: “With the numerous political and economic changes that we’ve seen over the past year, customers value advisers who are prepared to go the extra mile and provide sympathetic and understanding advice.”
