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Financial advisers improving level of value they deliver to clients, says Vanguard

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Vanguard Asset Management’s Adviser Value Index, now in its second year, has increased from 73 to 75 out of 100 based on the perceptions of more than 750 UK advised clients on the value of advice relative to fees paid, market performance and reaching long-term financial goals.

The increase in the perception of value is consistent with changes in other core relationship metrics, including:
 
• Overall satisfaction. 50% of clients provided a rating of 5 out of 5 on overall satisfaction, up from 39% a year ago. 
• Loyalty. 87% of clients said they were somewhat or extremely likely to continue working with their adviser, up from 81% a year ago.
• Trust in adviser and the industry. 83% of clients provided a high or very high trust rating for their adviser, up from 77% in the last edition. Trust in the overall industry has also improved, rising from 22% to 29% during the same time period.
 
The findings also reveal that while investment returns are an important measure of value for clients, only 36% of advised clients believe that they are paying just for investment performance. Considerably more clients acknowledge that they are paying for help in defining or articulating their goals (46%), developing a plan (54%) and monitoring their goals and plans (55%).
 
In addition to continuing to track the performance of the Adviser Value Index, Vanguard focused its analysis on uncovering the activities that were closely correlated with higher value. Vanguard proposes the following action plan to help advisers increase the value they are delivering to clients:
 
1. Ask clients for feedback on the service they provide. There is a strong connection between asking for feedback and perception of value, particularly if the feedback is garnered using a formal method, such as a written or online survey.
2. Change the client conversation to focus on adding value during the client review. The client review is considered the most important way in which the adviser and client communicate about the plan.
3. Proactively educate clients about regulatory changes and fees. Clients perceiving high value are more likely to have discussed fees in-depth with their adviser.
4. Develop a communications plan that incorporates ‘high touch’ communications. Clients are more likely to perceive high value when engaged in activities such as review meetings and educational activities.
5. Manage client expectations. When the adviser formally outlines both the level of service a client can expect and the range of services the adviser has the ability to offer, accountability and perceived value are seen to rise.
6. Take a team approach. Clients value a team approach as it sends a positive message about the longevity of the adviser’s business.
 
Neil Cowell, Head of UK Retail Sales for Vanguard, says: “It is encouraging that we are seeing an increase in advised clients’ perceptions of value. Vanguard believes the Retail Distribution Review (RDR) encourages advisers to continue to enhance their value propositions. We found that clients, who perceive their relationships with their advisers as high value, are more likely to be familiar with the changes associated with the RDR, than those who perceive their relationships with their advisers as low value. Our action plan is designed to help advisers control and manage the client experience so they can continue to add value to their client relationships.”
 

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