As the financial planning profession continues its inexorable march towards a fiduciary client-centric standard of care that minimizes or outright avoids conflicts of interest, those most passionate about carrying the torch have often been the most vocal in promoting those standards within their own businesses.
Yet recent research shows that from the consumer’s perspective, “fiduciary” is confusing and the word “fees” evokes an outright negative response; the special meanings we attach to those words inside our industry have translated poorly to the general public.
The key, then, is to figure out how to operate in the interests of clients, while communicating a message that is less about the battles being fought inside the industry and more about how the client benefits. Otherwise, while it’s true that those firms doing the best job of truly serving clients may be rewarded with the most referrals, they may not be able to convert those referrals to clients and grow their businesses if they have dug themselves a hole they can’t climb out of by using consumer-unfriendly terminology in the first place.
The inspiration for today’s blog post is the highlights of a recent study by the brand engagement firm Sullivan and the market research consultancy Northstar Research Partners entitled “Rebuilding Investor Trust” that attempted to answer the question “What Do Today’s Affluent Investors Really Want?” The study, which has been repeated for several years, looks at trends in trust with advisors.
As a part of the study, Sullivan/Northstar also examined general investor reactions to a wide array of terms commonly used by financial advisors, evaluating which were viewed positively, which were negative, and which were confusing. The surprising results? Some of the words advisors use most commonly to inspire trust, like “fee-based” or “fiduciary” are actually some of the most negative and confusing words in the advisor’s lexicon, from the perspective of the client.
The Sullivan/Northstar Results On Fees