Perception of the value of advice received, supports our conviction 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 matters are complex. As such, could be the subject of intense debate to adequately explore and explain. We have limited this to offer some guidance as to how to continue to improve the process of sourcing advice.
The article concludes with reference to some important research that highlights the value of advice in relation to financial matters. This is a matter that is key component of overall wellbeing, including affecting mental health issues. (An extract from the report by Fidelity International on this research appears at the end of the article. There is a link to the full report in the extract.)
How do you value the advice you receive from different sources?
We define ‘value’ in this context as your appreciation of the helpfulness and relevance of the advice.
Whilst this article is concerned with advice that you pay for, similar rules for valuing advice apply to pro-bono advice. Dare we say, even to gratuitous advice.
It is important to distinguish between the assessment of the value of, and the price paid for, advice. In that context, value is exposed as an emotional or psychological assessment more so than a financial one.
Typically, a significant consideration in assessing value is any personal ‘benefit’ you derive from the advice given. Think: how helpful you find it to be, relative to the circumstances you are encountering. If the advice received helps you to resolve a challenge, you are more likely to value it than not. Bear in mind that ‘resolving it’ might be understanding the circumstances/ consequences of the situation, not necessarily overcoming the ‘problem’. The more readily you come to this conclusion, the greater the value you attribute to the advice.
The value assessment hierarchy
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 has a greater impact on you than the usefulness of the advice.
- (In this context, the price of pro-bono/ gratuitous advice is the time and emotional commitment given to seeking the advice.)
The perceived value of advice can also vary according to its frequency; and the circumstances at the time it is sought. 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. We will then expect them to make the relevant enquiries of us before providing the advice. This aspect imposes a level of obligation on us as advice-seekers. An obligation 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 will provide advice.
Developing our trust in the adviser, we have to rely on them having –
- an appropriate educational background,
- professional registrations (where relevant), and
- testimonials (and/ or referrals) from our peers and others, as well as, 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. Instagram, You Tube and other platforms may also be relevant in particular circumstances. A referral from a trusted family member or friend who has dealt with a similar issue will strengthen our confidence.
Our responsibility when seeking advice
Our own responsibility when seeking advice, 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 –
- 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?
…and we will be guided by the expertise of the respective adviser sought in each case
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 important aspects of the relationship.
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. Elation 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. We affirm our appreciation 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
- 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 reinforce our attitude to the experience in the sharing.
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.
Using social media and the internet
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 as we apply our mantra that – ‘ we listen, we understand, and we have solutions…’ to their financial concerns, goals and objectives.
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, at your convenience use this Book A Meeting facility.
The Fidelity International report extract
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.”
…
Advised investors
“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.
What unadvised investors have to say
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.”
(This articles was originally posted in July 2020. It has occasionally been updated/ refreshed, most recently in October 2024.)
