IFFP Advisers - Not as good as the rest?
The Financial Guru is a strong supporter for the need for people to seek advice. Financial products are complex, tax is complicated and the ability for people to do their own research diminished by the sheer breath of skills areas to be covered. That’s were a skilled adviser can help, drawing the strings of ownership (which in part determines taxation), risk tolerance, income needs and product together into a cohesive plan tailored for the individual.
So it was interesting to read of the results of a survey by CoreData of a Mystery-Shopping exercise conducted across the financial planning industry. Reportedly the survey disclosed that the services provided by advisers from the Industry Funds Financial Planning (IFFP) group are not as good as independent financial advisers (IFAs) and bank-aligned planners.
It reported that whilst IFFP advisers showed a good understanding of the basics, they had a limited ability to meet customers’ planning needs. Apparently, they found it difficult to build relationships with clients and cater for individual situations that deviated from the norm. We wonder if this was because of their narrow focus on Industry Superannuation funds rather than the broader view that financial advisers need too take.
CoreData said “The IFFP model appears to be restricted and limited both in terms of the solutions its advisers can offer and also around the notion of an ongoing service proposition”.
The research was based on 480 shadow shopping events conducted by more than 200 people who were aged between 45-60 years and between two to 20 years from their expected retirement date and who held more than $150,000 in investable assets or superannuation.
The Industry Fund Network believes they are on a winner providing salaried advisers to service their huge membership base. What they miss however is the incentive for advisers to perform. Whilst independent financial advisers are willing to put the work into keeping their knowledge up to date and building their businesses, the salaried adviser has no incentive to go the extra yard and as a result they develop a ‘take it or leave it’ attitude which appeared to come through in the survey results. This is reinforced by the data that shows IFAs also outperform the bank aligned salaried advisers.
At the end of the day, how can taking away incentive and restricting the breadth of advice be good for consumers?
POSTED: 21-Jan-2010