Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Investment management wikipedia , lookup
Systemic risk wikipedia , lookup
Financial economics wikipedia , lookup
Global financial system wikipedia , lookup
Stock trader wikipedia , lookup
Financial contagion wikipedia , lookup
Systemically important financial institution wikipedia , lookup
Financial crisis wikipedia , lookup
Financial Crisis Inquiry Commission wikipedia , lookup
Lifeplan ICFS Financial Advice Satisfaction Index April 2014 About the Lifeplan ICFS Financial Advice Satisfaction Index The Lifeplan ICFS Financial Advice Satisfaction Index (FASI) is a tool for financial advisers that want to improve their levels of client service. It is based on academic research that models the factors that explain a client’s willingness to recommend their financial adviser to a friend or acquaintance. The three attributes that have the greatest impact on advocacy include: 1. The trustworthiness of the financial planner 2. The client’s perception of how their investments have performed 3. The financial adviser’s technical ability The research also analyses how investors’ age, levels of investment and length of their relationship with their adviser impacts these attributes. The research is sponsored by Lifeplan Funds Management a part of the Australian Unity Group. It is conducted every six months by the University of Adelaide’s International Centre for Financial Services. INTERNATIONAL CENTRE FOR FINANCIAL SERVICES Project sponsored by International Centre for Financial Services (ICFS) University of Adelaide For Lifeplan Lifeplan (ICFS) Financial Advice Satisfaction Index Lifeplan Financial Advice Satisfaction Index April 2014 This survey of 403 respondents, conducted during the last weeks of March 2014 pushed the Lifeplan Satisfaction Index to its highest levels since its inception This survey of 403 respondents, conducted during the last weeks of March 2014 pushed the Lifeplan Satisfaction Index to its highest levels since its inception, with each of the three drivers (the perception of performance, trust and reliability, technical abilities), measured in this index, at their highest levels since 2007. The index showed an increase in the satisfaction investors have with their financial advisors, which has increased to 74.5 (see figure 1) from October 2013. The survey saw an increase of 3% and 2.6% over the October 2013 and April 2013 surveys respectively. The largest increase amongst the three drivers of advocacy was for the perception of performance which increased by 4.13% (over the last survey). The other drivers – the perception of trust and reliability increased by 2.2% and for the perception of technical abilities of the advisors increased by 2.9%. The domestic equity market index, the ASX200, continued to show gains over the last year of 8% (the index increased by 1.7% over the survey period), although it has not reached the 2007 levels. Graph 1 Financial Advice Satisfaction Index (FASI) (scaled by 0.10) FASI Page 2 Lifeplan (ICFS) Financial Advice Satisfaction Index Supporting research The following six graphs show the relationship between the index, and each of its drivers, and the equity markets (ASX 200 is used as a proxy of the equity market). Graph 2 The Financial Advice Satisfaction Index (scaled by 0.10) and the ASX 200 Although, the capital markets (both domestic and US) have yet to achieve their pre-GFC levels, the FASI and its three drivers are at record levels. The authors argue that, in increasingly complex and dynamic capital markets, this indicates value-added services are being provided by financial advisors ASX 200 FASI Graph 3 Drivers of Advocacy, the FASI (scaled by 0.10) and the ASX 200 The largest increase amongst the three drivers of advocacy was for the perception of performance FASI ASX 200 Graph 4 Perception of Trust and Reliability, the FASI (scaled by 0.10) and the ASX 200 ASX 200 FASI Page 3 Lifeplan (ICFS) Financial Advice Satisfaction Index Appendix 1: Relationship between Investment Levels and Drivers of Advocacy Graph 5 Perception of Performance, FASI (scaled by 0.10) and the ASX 200 ASX 200 FASI Graph 6 Perception of Technical Abilities, FASI (scaled by 0.10) and the ASX 200 ASX 200 FASI Page 4 Lifeplan (ICFS) Financial Advice Satisfaction Index Highlights of the survey Female investors continue to show a higher level of perceptions regarding their advisors than male investors The authors note that much has changed in the domestic and global landscape since the last survey. This period marked a new business-friendly domestic government, a strong recovery in the domestic equity and housing markets, a strong recovery of the US economy and capital markets, banking sector recovery in the Euro economies, and general investment confidence. Although, the capital markets (both domestic and US) have yet to achieve their pre-GFC levels, the FASI and its three drivers are at record levels. The authors argue that, in increasingly complex and dynamic capital markets, this indicates value-added services are being provided by financial advisors. Other highlights of this survey include: Investors in the 30-44 age bracket show the strongest increase in all three drivers of perception This survey shows a sharp increase in the levels of advocacy by those investors with the shortest duration of taking advice (less than 2 years) ¡¡ Female investors continue to show a higher level of perceptions regarding their advisors than male investors. However, the results show that male investors showed a very strong increase in all three drivers of perception. ¡¡ Investors in the 30-44 age bracket show the strongest increase in all three drivers of perception and now have the same or higher levels or perception as investors in the 45-60 age bracket. ¡¡ The results remain unchanged with regards to the 60+ group. However, we note a sharp downturn in the levels of perception of all three drivers for the under 30s. The 30-44 age bracket held a significantly lower perception of their advisors of technical abilities, trust and reliability compared with the 60+ cohort. ¡¡ However, both groups rank their own financial literacy at almost the same level - high. The authors note that the younger age bracket invests significantly lower wealth and has been engaged in a significantly shorter advisory period. When the 30-44s are compared with the 45-60s, the younger cohort holds significantly favourable views regarding the advisor’s role in advising on their investments, even though the younger group invests a much smaller amount. ¡¡ Analysis of the duration of taking advice, especially with the same advisor, provides slightly contrasting results to past surveys. In accordance with previous surveys longer duration of advice and advice with the same advisor does result in higher levels of perceptions for trust and reliability and for the technical abilities of the advisor. ¡¡ However, this survey shows a sharp increase in the levels of advocacy by those investors with the shortest duration of taking advice (less than 2 years). Investigation into the differences compared with the other groups with longer duration of advice (two to five years and five to 10 years) reveal the obvious - those with shorter duration of advice are younger and have lower levels of wealth invested - but also shows that they attribute themselves with similar levels of financial literacy. There is significant difference in the levels of perception regarding trust and reliability and technical abilities of their advisors. However, there was no significant difference in terms of the perceptions of performance. The group with the shortest duration of advice also rate themselves at the same level as those with longer duration of advice. ¡¡ Investors with higher levels of wealth are significantly older, have larger investments, higher levels of financial literacy, have been taking advice the longest (their current advisory relationship is also the longest amongst survey respondents). This survey parallels previous surveys in this regard. ¡¡ Investors in the Under-30 age group seemed least satisfied with the quality of advice they are receiving. They are least satisfied by the technical abilities of their advisors and the performance of their portfolio which is perceived to be because of the financial advice they are receiving. Interestingly, this group of investors also categorize their financial literacy as high. Therefore advisors need to have higher levels of technical abilities to satisfy these individuals. Under-30’s categorise themselves as having high levels of financial literacy and amongst all the age groups are least satisfied with the quality of advice they are receiving. Page 5 Lifeplan (ICFS) Financial Advice Satisfaction Index Investors have a higher perception of their advisors if fees and charges are detailed explicitly, though they were not as concerned about the amount of fees paid, if they felt that the fees were appropriate for the services received Investors ranked their advisors highly in terms of trustworthiness and their technical abilities if their advisors displayed high financial literacy. Analysis of service and advisory factors were explored to understand the impact they have on drivers of advocacy. There were several factors that were important across all investor age groups. Investors: ¡¡ value the advisors ability to establish an effective investment plan including advisors recommendations for quality funds/fund managers, ¡¡ have a higher perception of their advisors if fees and charges are detailed explicitly, though they were not as concerned about the amount of fees paid, if they felt that the fees were appropriate for the services received, ¡¡ ranked their advisors highly in terms of trustworthiness and their technical abilities if their advisors displayed high financial literacy. Advisors with high financial literacy were perceived to be able to devise suitable financial plans, ¡¡ desire greater financial risk management. Investors who were very satisfied with their financial advisor had an overarching feeling of being financially secure. Page 6 Lifeplan (ICFS) Financial Advice Satisfaction Index Appendix 1: Historical Relationship between Demographic Variables and Drivers of Advocacy Chart 1A Relationship between Gender and Drivers of Advocacy Page 7 Lifeplan (ICFS) Financial Advice Satisfaction Index Chart 1B Relationship between Age and Drivers of Advocacy Page 8 Lifeplan (ICFS) Financial Advice Satisfaction Index Chart 1C Relationship between Duration of Advice and Drivers of Advocacy Page 9 Lifeplan (ICFS) Financial Advice Satisfaction Index Chart 1D Relationship between Duration of Advice with Same Advisor and Drivers of Advocacy Page 10 Lifeplan (ICFS) Financial Advice Satisfaction Index Chart 1E Relationship between Investment Levels and Drivers of Advocacy Page 11