New INGA survey finds consumers want fee transparency

A key finding of new research released today by ING Australia has found that clients want more transparency on adviser fees.

ING Australia commissioned Nielsen to survey over 700 consumers and 300 financial advisers in June and July to better understand consumer perceptions of financial advice, building on research undertaken for INGA in 2006.

Dan Powell, INGA Executive Director of Sales & Marketing, said a key finding of this year’s survey was that clients are willingly to pay for quality advice but expect advisers to be able to clearly articulate their value and fee structure.

“The research findings also highlight that while clients expect their advisers to be able to provide a clear fee structure, there is no preference for ‘fee for service’, commission, or a mix of both.

“The debate is not about fee for service versus commission, it’s about the provision of quality advice and the overall outcome.

“People are becoming increasingly financially savvy, and understand that advice will help them. The opportunity and challenge for the industry is to articulate the value of advice and in delivering it, exceed consumer expectations.”

Key results from the survey indicate:

1. Consumer satisfaction with advisers is rising but so are expectations.
2. The void is widening for advisers to clearly explain the products they are recommending and recognise that they are being judged on their ability to provide holistic advice.
3. Advisers and consumers agree the two most important adviser attributes are honesty and trust, and understanding financial goals.
4. Advisers and consumers increasingly agree that advisers need to take clear accountability for their recommendations.

Key numbers from the survey are:

• 71% of surveyed consumers considered fee transparency very important,
• The percentage of satisfied customers has grown to 90% (58% ‘very satisfied’ and 32% ‘somewhat satisfied’), up from 80% (55% ‘very satisfied’ and 25% ‘somewhat satisfied’) in 2006.
• There was no clear preference for fee structure – commission (18%), a mix of fee and commission (18%), and no preference (20%).
• The amount of contact from the adviser also impacts how many referrals they will receive from their clients, with only 12% recommending an adviser if they have not been contacted in the past 12 months
  

While there can be a disconnect between consumer and adviser views on the level of fee transparency, a majority of consumer respondents did not have a preference for fee-for-service or commission-based fee structures.

“Consumer satisfaction with financial advisers is at record levels, but advisers are having to work harder to meet the growing demands of their clients.

“There is an increasing expectation that advisers should provide more information about the fees and services they receive, such as face-to-face time. Consumers are now willing to shop around and compare fee structures and what they get.  Some advisers have not yet embraced this market change and will need to address this issue if they want to retain clients and grow their business,” said Mr Powell.