Financial Advice Satisfaction Index April 2017

Transcription

1 Financial Advice Satisfaction Index April 2017 About the Financial Advice Satisfaction Index The Financial Advice Index (FASI) is a tool for financial advisers who 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. 1. The three attributes that have the greatest impact on advocacy include: 2. The trustworthiness of the financial adviser 3. The client s perception of how their investments have performed 4. The financial adviser s technical ability The research also analyses how investors age, levels of investment and length of their relationship with their financial adviser impacts these attributes. 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, Lifeplan Australia Friendly Society Limited (Lifeplan) ABN AFS Licence Lifeplan is part of the Australian Unity Group, all rights reserved. Not to be reproduced without permission.

2 About the Financial Advice Satisfaction Index The index showed an increase of 2.7% to 75.2, the highest the index has recorded since its inception. The April 2017 survey (of 405 respondents) was conducted in the last week of March and the first fortnight of April and showed an increase (2.7%) to 75.2 over the last survey (see graph 1), and showed a year-on-year increase of 2.4% over the April 2016 index levels. All three drivers of satisfaction increased since the last survey, with the largest increase (2.9%) registered for the perceptions of Technical Abilities of the Financial Adviser, followed by a similar increase in the perception of Performance of their adviser by 2.8%. Perception of Trust and Reliability also increased by almost 2.2%. Graph 1 Financial Advice Satisfaction Index (scaled by 0.10) All three drivers of satisfaction increased since the last survey. The Australian equity market index (S&P/ASX 200) increased by almost 8% since the last survey (see Graph 2), with a decrease in market volatility (see Graph 3) while interest rates are still at 1.5%. The Westpac Consumer sentiment index is lower (below 100) since the last two survey (see graph 4), a sign that economic conditions were perceived as marginally unfavourable. The domestic and the US markets have performed well over the last six months (since the October 2016 survey). However, interest rates are expected to further increase in the US that may have negative effects on the domestic equity market and on consumer sentiments (as housing loans increase). Graph 2 S&P/ASX 200 from January 2015 to May 2017 S&P/ASX 200 2

3 Graph 3 S&P/ASX 200 Volatility Index from January 2015 to May 2017 Graph 4 Australian Consumer Confidence Index from January 2016 to April 2017 Source: Westpac Banking Corporation, Melbourne Institute Supporting research Graphs 5-9 The following graphs show the relationship between the index, and each of its drivers, and the domestic equity market (S&P/ASX 200 is the domestic equity market Index). Graph 5 The Financial Advice Satisfaction Index (scaled by 0.10) and the S&P/ASX 200 3

4 Graph 6 Drivers of Advocacy, the FASI (scaled by 0.10) and the S&P/ASX 200 Graph 7 Perception of Trust and Reliability and the FASI (scaled by 0.10) Graph 8 Perception of Performance, FASI (scaled by 0.10) and the S&P/ASX 200 4

5 Graph 9 Perception of Technical Abilities, FASI (scaled by 0.10) and the S&P/ASX 200 Highlights of the Survey Duration of Advice (and duration with current adviser) and wealth levels were not a significant influencer on investors perceptions for Trust and Reliability and Technical Abilities. Highlights: The three drivers of satisfaction with financial advice are positively correlated with the perceived levels of their adviser s and their own levels of financial literacy. Trust and Reliability of their adviser and the Technical Abilities of their adviser were positively correlated with age, and female investors are more likely to have a higher levels of perceptions for the two drivers. Duration of Advice (and duration with current adviser) and wealth levels were not a significant influencer on investors perceptions for Trust and Reliability and Technical Abilities. The perception of Performance is unrelated to the age and gender of the investors. However, it is negatively related to Duration of Advice (and duration with the same adviser) but positively relate to wealth invested. 1. Gender: Both genders have the same perceptions of Trust and Reliability and Technical Abilities while the females have a lower level of perception of Performance. Both genders related higher levels of satisfaction (along all three dimensions) with higher levels of perceived financial literacy of their adviser. In addition, male investors perceptions of Trust and Reliability in their adviser is positively related with age and their own financial literacy. Duration of advice (and duration with the same adviser) and wealth levels did not influence the perception of Trust and Reliability. Both genders displayed a positive relationship between their perceptions of their advisers Technical Abilities and age and perceived levels of financial literacy. However, the female investors also displayed a positive relationship with the levels of wealth invested, but a negative relationship with the duration of advice. While the male investors perception of Performance is negatively related to Duration of Advice but unrelated with wealth, the female investors perceptions were positively related with wealth, and unrelated with duration of advice. 5

6 Financial Planning Satisfaction Index Age of investors was unrelated to their perception of Performance, but positively related to their own perceived level of financial literacy. 2. Age: Mature investors displayed higher levels of perceptions of Technical Abilities and Trust and Reliability. Female investors, regardless of age, hold higher levels of perceptions for the two drivers. While older investors (above 60 years) levels of perceptions of Trust and Reliability were positively linked with their wealth levels, regardless of age, invested wealth levels does not influence perceptions of Technical Abilities. Duration of Advice is negatively related with perception of Performance but the effect of length of relationship disappears for older (over 60 years) investors. Wealth levels do not influence perception of Performance except for investors aged 45 to 60 years. Age of investors (either gender) was unrelated to their perception of Performance, but positively related to their own perceived level of financial literacy. 3. Wealth: Higher levels of wealth invested positively affects the perception of Performance, but has no influence on the other two drivers of satisfaction. Investors with lower levels of wealth (below $50K) and female investors with mid-levels of wealth (up to $250K) display a positive impact on the perception of Trust and Reliability. The perception of Performance is not influenced by gender differences across the wealth levels. However, investors with higher wealth levels (above $250K) show a positive relationship between age groups and the perception of Performance. Gender differences is an important determinant of Technical Abilities (as stated above), age is only important at lower investment levels ($50K). Issued by Lifeplan Australia Friendly Society Limited ABN , AFS Licence No Gawler Place Adelaide SA 5000 T F E investmentbonds@australianunity.com.au W australianunity.com.au 6

7 Appendix 1: Historical Relationship between Demographic Variables and Drivers of Advocacy Graph 1A Relationship between Gender and Drivers of Advocacy 7

8 Graphs 1B Relationship between Age and Drivers of Advocacy 8

9 Graphs 1C Relationship between Duration of Advice and Drivers of Advocacy 9

10 Graphs 1D Relationship between Duration of Advice with Same Adviser and Drivers of Advocacy 10

11 Graphs 1E Relationship between Investment Levels and Drivers of Advocacy IB