Perception of the value of advice received, supports our conviction to act – and to act with confidence – in many of our life experiences: in this article, we focus on the value of advice in a wealth management/ financial planning environment.
In that context, we contemplate:
- the hierarchy of value of advice from different sources,
- some key aspects of valued advice that cause us to action the advice,
- how we react to such advice – and
- by what mechanisms we are likely to have sourced the provider of that advice.
Each of the above issues gives are complex and accordingly, could be the subject of intense debate: they could also take many pages of explanation and exploration. We spare you that level of detail – and offer some guidance as to how to continue to improve the process of sourcing advice, for yourself and for others, now and in the future.
The article wraps up with reference to some important research that highlights the value of advice in relation to financial matters, which are a key component of overall wellbeing, including affecting mental health issues identified in this COVID-19 era. (An extract from the report by Fidelity International on this research appears at the end of the article: a link to the full report appears in the extract.)
How do you value the advice you receive from different sources?
To limit the scope of the question we define ‘value’ in this context as your appreciation of the helpfulness and relevance of the advice.
Whilst the question in our context is most relevant to the advice that you pay for, some of the same rules for valuing advice also apply to pro-bono advice, even to gratuitous advice.
In preparing this opinion piece, the literature that was researched indicated that it is important to distinguish between the assessment of the value of, as opposed to the price paid for, the advice. In that context, value is exposed as an emotional or psychological assessment more so than a financial one.
Typically, a significant part of the assessment process goes to the level of personal ‘benefit’ you derive from the advice given (how helpful you find it to be, relative to the circumstances you are encountering). If the advice received helps you to resolve a dilemma or difficulty, you are more likely to value it than not (and resolving it, might be to understand and accept the circumstances/ consequences of the situation; as to overcome the ‘problem’). The more readily you come to this conclusion, the greater the value you attribute to the advice.
In a range of value assessments, the hierarchy runs from the highest value being assigned to when the appreciation of the advice is held without consideration of the price paid – diminishing in ‘value’ as the price paid comes into consideration and ultimately having a greater impact on you than the usefulness of the advice. (The price of pro-bono advice – and gratuitous advice – is the time and emotional commitment you have given to seeking/ receiving the advice.)
Of course, the perceived value of advice can also vary according to its frequency; and the circumstances at the time it is sought and received. In an ongoing advice situation, the complexity of prevailing circumstances may very well influence the assessment of the value of the advice received on each occasion. In these circumstances, our value assessments vary and can have both a ‘point in time’ value; and an ‘overall’ value.
What are the elements of, and contributors to, that advice that lead you to act on it with confidence?
A key element of the advice that we value and in which we have confidence, is trust in the adviser. Part of the trust we have in the adviser, is that the they are appropriately qualified and experienced to give the advice – and as such, will make the relevant enquiries of us before offering it. This aspect imposes a level of obligation on us as advice-seekers: to approach our adviser with as much relevant information (background, history, data etc) and provide that as accurately and concisely as possible so that they have a reasonable basis for making recommendations to our benefit. For an example of this, consider the first visit you make to a medical clinic and all that they need you to tell the doctor before they can provide advice.
Developing our trust in the adviser, we have to rely on information about their educational background, professional registrations, and testimonials (and/ or referrals) from our peers and others, as well in relevant circumstances, verifiable information on their websites and any social media presence. The most likely social media presences will be Facebook Business pages and LinkedIn where professional services are involved; but Instagram, You Tube and other platforms may also be relevant. A referral from a trusted family member or friend who has dealt with a similar issue adds to the formation of our trust in the selected adviser.
Our own responsibility is to be able to explain what our dilemma is: whilst that is usually obvious in significant ‘medical’ matters – usually on a referral by our GP – it is not always fully understood in other situations. The information needed to be provided to advisers from whom we seek assistance to the following dilemmas will vary: and we will be guided by the expertise of the respective adviser sought in each case –
- What’s wrong with my computer?
- Is my problem the Internet, my Broadband or my own lack of awareness of how the software works?
- Why is my body weight ‘out of control’?
- Why am I not sleeping at night?
- Am I on-track to be financially independent in retirement?
To help get the right advice, from the right person and at the most reasonable cost, we need to compile all of the information that is causing our anxiety. A helpful step at this stage is checking with the adviser as to what will be useful and relevant for them to know; and then to compile that information as completely and concisely as possible.
If we hold the above to be true, we can conclude that trust and open communication are impo>How do you react/ respond to advice that you value?
When we receive advice that is helpful, timely and valued, there are a few things that usually follow:
- Relief
- Elation
- Appreciation
- Implementation
Relief and elation are emotional responses to advice that provides answers to dilemmas we encounter in life: relief to know that there is an explanation of/ solution to the dilemma; and elation (at varying levels depending on the severity of the dilemma) to know that the difficulty it is creating for you, can be addressed and will resolve.
Appreciation and implementation are action responses: it is not unusual for us to respond to advice that we value, with acknowledgement to the provider that it has been helpful; and we usually react by implementing the advice as fully and as promptly, as we can.
Our appreciation can also be shown in other ways – and most of us have used at least one of the following:
- A letter, email or phone call directly to the provider expressing our thanks
- Telling friends and family about the service and the value of advice received (and that becoming a potential for referral to the adviser)
- Posting a testimonial on their website
- Posting a recommendation on their Google search page, their social media platform(s) and/or other searchable online services.
These action responses are important for our own appreciation of the value of advice we have received as they reinf>How do you source the advice that you need?
If we reflect then on the revelation that the advice we value most, is that which gives us the greater benefit, is trusted and is implemented, it is also useful to consider how we sourced the adviser/ provider – and how we might make it easier for others to access our trusted adviser.
Over the past several decades there have been many surveys and research studies that show that the most acted-upon recommendation for any product or service, is personal recommendation. In recent times, those recommendations are still the best source by which to identify service/ product providers, but they are now very often enhanced by reference to internet searches using one or more search engines (Google, Yahoo etc); and by reference to ‘user-forums’ and social media. We use these tools to help us collate as much information as possible about the provider in whom we are about to confide, to see if we can develop a level of certainty and confidence that they are ‘the right fit’ for our personality and purposes.
If you make a Google Search for any provider, you will probably encounter a side panel to the Search results showing what their business/ service provides, when it is open, how to contact them and amongst other relevant information, comments/ recommendations that have been left by people who have used their services. You will also find a range of Search results that will include references to social media presences they have, other forums where they are mentioned, pages from their website and in some instances, references to industry/ professional and other organisations with whom they are affiliated/ associated.
The less that we know about a person/ business from whom we are considering seeking advice/ service, the more widely we are likely to investigate some of these sources of information about them – and that means we will be investing time in our intended provider even before we contact them. (Better to invest the time at this stage, than to blindly ‘spend the money’ and come away disappointed!)
Recent surveys about how the financial planning industry has a positive impact on those who engage our services has prompted us to feature this message: we are passionate about providing excellent service, personalised, professional advice – and being engaged with clients in th>Where to get advice that you value
As a side-note of potential interest, the Financial Adviser Register (the FAR) maintained by ASIC (the relevant industry regulator), shows that there is one (1) financial planner in Australia for every 1,190 people – and that of the more than 23,000 advisers who were registered as at 1 January 2020, more than 1,750 have left the industry (and come off that register) during the six months to 30 June. (The number of registered Financial Advisers has fallen since the above numbers were produced, to the situation where as at 31 May 2022, there remain only 17,000 advisers – and indications are that this number could reduce further by the end of 2022: that means that there is now only one registered financial adviser for every 1,600 people in Australia!)
ContinuumFP financial advisers are available to work with you to develop advice that you value, to develop SMART goals, financial objectives and wealth management strategies that will give you understanding and confidence in your investment strategies and portfolios: to arrange a meeting with one of the team, call us on 07-34213456; or complete the Contact form on our website.
The following extracts are from Fidelity International’s report on their survey of over 2,000 investors in early 2020: please read their full article ‘The Value of Advice’ –
“A key aspect of financial wellbeing is how an individual views their financial situation and how much control they believe they have over it. And the evidence is clear that financial wellbeing can have a big impact on someone’s overall wellbeing.
A 2015 Australian Psychological Society report found that financial issues were rated as the top cause of stress for Australians, and had been for a considerable period of time. The federal government’s Head to Health website highlights that mental health and ‘financial safety’ are strongly linked.”
…
“Seeking financial advice generally has a positive impact on an individual’s financial wellbeing. Almost three quarters (74.3%) of Australians currently receiving financial advice say their financial wellbeing has improved as a result.
88.5% of Australians receiving advice believe it has given them greater peace of mind financially.
86.2% of Australians receiving advice believe it has given them greater control over their financial situation.
More than seven in 10 (71.3%) Australians currently receiving advice believe it has generated more value to them than it has cost.
Even those who are unadvised recognise the potential benefits of advice, with the majority thinking that receiving advice would give them greater peace of mind financially (64.4%) or greater control over their financial situation (63.3%).”
…
“Receiving financial advice provides benefits to people beyond the expected financial aspects, with mental health, family life and physical health often positively influenced.
49.9% of Australians receiving financial advice say their mental health has benefited.
37.8% of Australians receiving financial advice say their family life has improved as a result.
18.1% of Australians receiving financial advice say their health has improved as a result.
Even Australians who are currently unadvised say they can see the potential non-financial benefits of advice. More than one in three (35.8%) say their mental health could benefit from receiving advice. Three in 10 (30.3%) say their family life could be improved, while one in six (16.6%) say their physical health could benefit.”
