Are You Getting Value From Your Wealth Adviser?

In the past 3 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 US have all come up with their research on what is the value of financial advice. Back in my firm, we had many intense debates on this topic as well. We wondered what the Singapore-domiciled clients will think. This led to us to doing a year-long project in 2022, which included conducting 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 what value you should be expecting from your adviser and his advisory firm.

Value 1: Deep conversations to help clients understand themselves better

Clients who come for wealth advice are already financially successful. But in their pursuit of success, they went through the ups and downs of life. Some of them experienced broken relationships, death of loved ones, career burnt out, health issues among many others. Some are already in retirement. When they come to a firm like us to take advice, they told us that beyond financial advice, it is our ability to hold deep conversations with them, helping them know what is the good life that they want to live before expressing it through their wealth plan that adds real value to them. According to Richard Leider and David Shapiro, authors of the book “Repacking Your Bags”, living the good life is defined 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’ 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 but 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: Wealth advisory firm’s experience to know what will work and not 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 2 decades, we had opportunities to walk the life journeys of our clients. These can include birth of newborns, death of loved ones or even the sickness and finally death of our clients. We have worked with them through their loss of jobs and journeyed with them in their retirement. We have survived various financial crises. So, when it comes to life and wealth planning, these experiences have enabled us to know what will work and what will not. These experiences gained are expressed through our various philosophies such as wealth planning , investment, insurance, and even legacy planning philosophies. 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.

  1. In the area of insurance, run through all scenarios to know if all their life risks are adequately insured and they did not have to spend large amount of premiums which leaves enough money for them to live a life today and still invest for tomorrow.
  2. In the area of accumulating towards retirement, during the regular progress meetings, check if 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 life time.
  3. In the area of investing, the portfolio is being managed and behaving in the way where the client adviser say it will behave and the longer term returns (at least 5 years) are within return expectation.

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

Making life and financial decisions are one of the biggest decisions in life and while many clients understand in their heads what they should do, their hearts may not follow. But if clients do not act, the advice no matter how good is of no use. So as a client, if his client adviser and his firm can help him act on the advice, there is great value. How can advisory firms deliver this value? According to the focus group discussions and surveys, 2 things stood out. Clients told us that it was our regular education and consistent communication (especially during times of financial markets turmoil) as well as their trust in us that 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 firms 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 the adviser’s names. They simply represent knowledge gathered. What you really want from an adviser is wisdom which comes from application of knowledge with experience. To know if their advisers are reliable, observe whether they keep their promises, deliver results that they say they will, and keep them informed of what they and their firms are up to and 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 conflict of interest.

If all you have been getting from your adviser/relationship manager is a financial needs analysis, comparing, and pitching you with new financial products, you may not have been 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 are doing a much better job in these tasks and at a lower cost.

Over the weekend, I attended a 2-day programme which taught breathing exercise. It promises many health benefits and costs $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 surpassed 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, Christopher Tan, is Chief Executive Officer of Providend, Singapore’s first fee-only wealth advisory firm and author of the book “Money Wisdom: Simple Truths for Financial Wellness“.

The edited version of this article has been published in The Business Times on 22nd August 2023.

For more related resources, check out:
1. In a World That Values Speed, Slow Down
2. Here’s Why We Charge a Higher Fee Than Robos
3. Are You Getting the Best Value from Your Wealth Adviser?

*Providend is very excited to share that we are now ready to extend our service offerings to the younger accumulators who are looking for holistic, independent, conflict-free wealth advice!

For this group of younger accumulators, we know that it is not easy to make retirement planning a priority when other financial goals – buying a first home, for example, or saving for a child’s education – appear more pressing. Learn how we can help here.

We do not charge a fee at the first consultation meeting. If you would like an honest second opinion on your current estate plan, investment portfolio, financial and/or retirement plan, make an appointment with us today.

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