Research outfit Boring Money (FT Adviser 14/5/20) have conducted some research into the performance of Financial Advisors in terms of the service satisfaction that they provide to their clients – especially during this lockdown period. The research looked at responses from almost 8,000 people across a number of surveys.
Of the “advised” clients, just over a quarter (26%) said that they had not heard from their adviser during lockdown. But is that a bad thing?
There are a few reasons why an adviser might not have contacted a client. Firstly, they might not want to create unnecessarily concern, after all there is very little that can be done short term to address falls in investment values. Secondly, if clients have understood their investment risk properly they will know the value of investments can go down as well as up, but will also be confident that their portfolio risk has been designed to reflect their individual circumstances and so they haven’t felt the need to contact their adviser in any event. Of course, not all clients pay for ongoing service reviews, so some may only speak to their adviser when they need to perform a transaction. Advised clients are also usually on a review schedule, for example quarterly or half yearly and as long as these reviews are being met clients will continue to be looked after.
The survey found that over 90% of advised clients said that they remained pleased with the service offered by their adviser.
Under the recent Mifid II rules, providers are required to inform clients in writing if the value of their investments falls by 10%. However, the FCA has suspended that requirement since March, to reduce the workload on the industry but also to prevent the creation of undue anxiety. On this point we think that the FCA has made the right call – why worry people unnecessarily if there’s noting that can be done short term.
Being available to talk to clients however remains very important. For those clients who are concerned it’s been very important that adviser businesses have remained open and that advisers have been available on the phone or through video conferencing to provide reassurance.
The research also showed that over 60% of clients reported that they would be happy if their advisor continued to communicate with them by video call.
Most worryingly was the statistic that the survey found that only 9% of people were actually being professionally advised – this figure is far too low.