EDITORIAL

Work out your value proposition

The past few months have been a time for financial advice to shine.

First there was the March market upheaval, which served as a reminder to many people that investments aren’t a one-way bet.

Then interest rates kept on falling, putting pressure on those with money in the bank to do something else with those funds – but what?

Advisers who were on hand to offer guidance and help clients stick to their path have been invaluable.

The Financial Services Council recently tried to put a clear number on the value that advisers add. Its research found that financial returns for New Zealanders who get financial advice are 4% better than the returns of those who don’t.

Financial advice clients also save 3.7% more money and travel six times more.

While we’re not jetting off on international holidays at present, that’s a pretty appealing proposition.

But still only about 20% of people were getting advice, the FSC found, and 40% did not know what the benefit would be in doing so.

The FSC noted that there’s a perception that only wealthy people with lots of money should have a financial adviser.

While it may be true that some advisers do not see the financial benefit in helping people with small amounts of money to invest, others are coming up with business models that work just as well for those who are in the accumulation stage of life as for those who are working out their decumulation strategies.

Data such as this should be the starting point for wider industry conversations about what financial advice could do for New Zealanders.

There’s increasing concern that with no end to low interest rates in sight, people will take on even more risk to chase returns, even when they cannot afford to.

Rather than delivering information about the problems with that to the group of engaged consumers who arguably would have been more likely to seek financial advice anyway, there should be efforts made to broaden the message of the solutions available with the help of an adviser.

The Financial Markets Authority has a role, which it seems to be taking to with increasing interest, in delivering messages about the importance of advice.

But the key will lie with advisers themselves. Work out your value proposition, what you can offer your clients, and make clear to anyone who asks the real benefits of seeking financial advice from a professional.

The faster the industry can shake off any negative connotations that linger as the result of news headlines or pre-regulation problems, the better off everyone will be.

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Philip Macalister

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Dawn Adams

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Chris Douglas, Clayton Coplestone, Daniel Dunkley, Daniel Smith, David Greenslade, David van Schaardenburg, Joanna Mathers, Justin Lannen, Michael Lang

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ASSET is published by Tarawera Publishing Ltd (TPL). TPL also publishes online money management magazine Good Returns GoodReturns.co.nz and TMM – The Mortgage Mag. All contents of ASSET Magazine are copyright Tarawera Publishing Ltd. Any reproduction without prior written permission is strictly prohibited. ISSN 1175-9585