What do clients think of financial advisors?

How consumers interact with the financial services industry: the FMA reveals everything in a mammoth presentation

Friday, August 4th 2022, 9:05 AM

by Jenni McManus

The FMA has today released the results of a wide-ranging survey into the mindsets and motivations of consumers when managing their finances and financial services industry.

The 130-page document covers areas such as emerging issues, products and services, trust and confidence, trends and trends in the financial sector, the impact of financial advice, customer information and regulation and protection.

Among its key findings: while 65% of consumers say they are confident in their ability to make financial decisions, only 21% believe they are in a stable financial position; just over 50% think they have a good level of financial knowledge; and 31% of consumers say they are nervous about talking to a financial advisor and find it difficult to find the right products and services.

In fact, only 18% of those surveyed used a financial advisor, mortgage broker or insurance agent in the past year.

Samantha Barrass, chief executive of the FMA, said the research would provide important insights as the regulator builds its understanding of the consumer’s mind.

“We want to use data and evidence to shape the way we manage and ensure the right marketing results,” he said. “This is particularly important following the passage of the Conduct of Financial Institutions Bill (COFI), which represents a significant expansion of our mandate to cover the needs of consumers of financial products and with services.”

Consumer confidence in the financial services sector varies. Banks are the most trusted (67%) and mortgage lenders (bank and non-bank) the least (37%), along with financial advisors (52%) and supply (48%) between.

Eight percent of respondents said they trusted financial advisors a lot, 44% trusted them “somewhat”, 33% had no or “somewhat distrust” them and 10% said they liked them a lot .

Most are unfamiliar with personal financial advice. Over 30% only use internet search, 27% trust family and friends, 25% go to bank or insurance sites and 20% use online tools to same as Sorted. Only 11% use a financial advisor – about the same number that trust YouTube.

Those who use advisors tend to be male and have a household income of more than $150,000. The majority of people using mortgage brokers are men 25-44 years old with a household income of more than $100,000 and those using insurance brokers are more likely to be men, 25-34 year, with a household income of more than $100,000.

The most common reasons for using financial advice are getting a better deal (32%), making a big investment or financial decision (29%) and getting help with an overall financial portfolio ( 27%).

When it comes to fairness in how they are treated by financial services providers, consumers say they are looking for open and transparent practices where providers clearly explain the issues and with the advantages of their products, the simplicity of the good press and the feeling as if it were. they are being treated like valuables.

The majority of consumers (66%) report no problems with their suppliers. Those who do, the three main things they worry about is not being implemented as they were led to believe, unexpected fees and charges, and poor service.

Only a third know how to complain if they feel they have been treated fairly. Of the 5% who complained about a financial services provider, only half said the complaint was resolved to their satisfaction. Another 7% said they wanted to complain but didn’t, which means some of the customers thought it was a form of complaint.

Barrass said he wanted to take a closer look at the complaints information “because it seems a lot of consumers don’t understand how the complaints process works for them”. It is an important part of consumer protection to resolve complaints quickly, he said.

Barrass wants to dig deeper into the issue of fairness and why some customers don’t see their financial products as expected and why they see unexpected fees. and other fees.

“What we’re starting to get from this research is that it’s important to have an effective program of action,” he said.

“It may be good for individual companies to think about how to set up effective work programs… .. [But] The main purpose of the research is for us to understand the customer experience and where we want to dig further.

Another concern is vulnerability. The analysis shows 14 important characteristics, led by health, life events, stability and ability. Only one in 10 customers does not fit one of the criteria, 46% meeting two and 43% meeting three.

Vulnerability doesn’t mean narrow, Barrass said. This is often the case when people have to make important financial decisions – for example, the death of a partner. “We’re not good at making decisions when we’re in those situations and we need more help from our providers.”

Keywords: FMA

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What do clients think of financial advisors?

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