Are you getting value from your adviser?

IN the past three years, many studies on the value of advice have emerged.

Fund managers like Russell Investments and Vanguard, as well as professional associations like CFA Institute and Financial Planning Association (FPA) in the United States have all come up with their research on the value of financial advice.

In my firm, we’ve had many intense debates on this topic as well. We wondered what Singapore-based clients think. This led us to start a year-long project in 2022, including surveys and focus group discussions to find out from our clients what is and should be the value of wealth advice to them.

This article summarises our findings which I hope will help you know the value you should expect from your adviser and his or her firm.

Value 1: Deep conversations to help clients better understand themselves

Clients who come for wealth advice are already financially successful. But in their pursuit of success, they went through ups and downs. Some experienced broken relationships, deaths of loved ones, career burnout, and health issues, among many others. Some are already in retirement.

When they come to a firm like us to take advice, they tell us that beyond financial advice, the real value lies in our ability to hold deep conversations with them, helping them understand what is the good life that they want to live before expressing it through their wealth plans.

Richard Leider and David Shapiro, authors of the book Repacking Your Bags, define the good life as “living in the place you belong, with the people you love, doing the right work, on purpose”. It means “having a sense of harmony among the various components of one’s life.

“For example, the place where you live provides adequate opportunities for you to do the level of work you want to do. That your work gives you time to be with the people you really love. And that your deepest relationships contribute to the sense of purpose you feel in the place where you live and work.”

To have such clarity requires clients to honestly answer some tough questions. Tough questions are very hard for clients to ask themselves, so having a client adviser who can do that is a real value-add.

Value 2: A wealth firm’s experience to know what works and doesn’t work

Through our surveys and focus group discussions, clients tell us that they find value in the wealth advisory firm’s experience because it helps them avoid costly mistakes and reach their destination faster.

Take where I work, for example. Over the past two decades, we’ve had opportunities to walk the life journeys of our clients. These include births, deaths of loved ones, or even illness and death of our clients. We worked with them through job loss, and journeyed with them in their retirement. We survived various financial crises.

So, in life and wealth planning, these experiences enable us to know what works and what does not work. These experiences gained are expressed through our philosophies in wealth planning, investment, insurance, and legacy planning. Interestingly, our focus group discussions showed that being aligned with these philosophies was the single most important reason why our clients chose us.

However, being aligned with the firm’s philosophies is one thing. Over time, clients want to see tangible evidence that the advice worked. This can be tough because not all advice is quantifiable. But clients can consider some of these areas to determine if the advice has worked.

• In insurance, run through all scenarios to ascertain if all their life risks are adequately insured and that premiums are not excessive. This leaves enough money for them to live a life today and still invest for tomorrow.
• In accumulating towards retirement, during the regular progress meetings, check that they are on track towards their goals. If they are at the withdrawal stage of their retirement, they should be able to withdraw the amount they need with confidence that their retirement fund will last their entire lifetime.
• In investing, the portfolio is being managed and behaves in the way that the client adviser says it would, and longer-term returns (at least five years) are within return expectations.

Value 3: Helping clients “connect their heads with their hearts”

The biggest decisions are those relating to life and finances. Many clients understand in their heads what they should do, but their hearts may not follow. If clients fail to act, even good advice is of no use. For advisers and their firms, there is therefore great value in helping clients act on advice.

How can advisory firms deliver this value? Two things stood out in our research. Clients told us that our regular education and consistent communication (especially in times of market turmoil), as well as their trust in us, helped them act on our advice.

How then can advisers earn their clients’ trust? According to David Maister et al, authors of the book Trusted Advisor, trustworthiness is a sum of the advisory firm and their client advisers’ credibility, reliability, and intimacy, all divided by their self-orientation.

In determining credibility, clients need to look beyond the long list of credentials behind an adviser’s name. Credentials simply represent knowledge gathered. What you really want from an adviser is wisdom which comes from application of knowledge and experience.

To determine if advisers are reliable, observe whether they keep their promises, deliver results they said they would, and whether clients are kept informed of what the advisers and their firms are up to. For intimacy, clients should look for advisers who can hold deep conversations with them, empathise with them and know what they really want in life.

Finally, they want advisers who have low self-orientation, meaning they will mitigate all possible conflicts of interest.

If all you have been getting from your adviser or relationship manager is a financial needs analysis, comparisons and pitches for new products, you may not be getting the real value of advice.

Don’t get me wrong. These tasks are important but they can be easily and better done by technology. It is no wonder that in recent years, consumers are flocking to digital advisers who do a much better job in these tasks and at a lower cost.

Over the weekend, I attended a two-day programme which taught breathing exercises. It promises many health benefits and cost S$1,200 to attend. Some may find the course fee too expensive. But if the health benefits are important for you, then the value you get far surpasses the price you pay.

Many have said that Singaporeans are unwilling to pay a fee for advice. Perhaps it is not that they are unwilling but because they do not see value.

The writer is chief executive officer of Providend, South-east Asia’s first fee-only comprehensive wealth advisory firm