Three quarters of financial advisers rely on portfolio performance to evidence value, failing to measure the true value of advice, finds new report

by | Nov 16, 2022

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Advisers are relying too heavily on performance data to evidence value, according to a new in-depth report from NextWealth into the implications of the Consumer Duty for the retail wealth management supply chain.

For the report, NextWealth asked 427 financial advisers what they document to evidence value to clients. 73% said performance of the portfolio. Next most common was milestones against client goals and objectives – reported against by less than half advisers.

Heather Hopkins, Managing Director of NextWealth comments: “Relying on performance data to evidence value is incredibly risky, particularly when markets are so volatile. Not only does it put too much emphasis on market conditions, it fails to measure the planning and emotional support that clients value most from working with a financial adviser.”



The report also surveyed 302 consumers who pay for on-going advice, and conducted in-depth interviews with 10. It found they generally perceive their ongoing fee as a fair way to remunerate their ‘always on’ financial adviser. Clients feel assured their adviser is working in the background in their best interests rather than only looking at their investments during chargeable hours or projects.

Heather Hopkins comments: “Advisers struggle with the intangible nature of documenting value. Performance against benchmarks is easy to collate and report but it fails to assess the true value of financial planning and advice. In our report, we highlight some of the metrics advisers can include in the assessment of value:

· Asking clients what they value via client surveys.


· Tracking time spent.

· Tagging client objectives in the CRM.

· Tracking goals set and goals achieved at a firm level.”


Other aspects included in the report:

· How prepared advice firms are for the new regulation

· Responsibility for implementation


· Addressing the four Consumer Duty outcomes

· Avoiding foreseeable harm

The report, Consumer Duty: Implications for the retail wealth management supply chain can be accessed via the NextWealth website.


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