Trust the Cornerstone of Financial Advice

There is no doubt that financial advice has the potential to improve the long-term financial health of an individual, and that's the reason it should be the basic right of every individual to receive high-quality advice. However, more than 19% of Australians have reported that the reason for not availing of advice is the trust gap in the industry.

While this trust deficit is not unfounded and has a basis in the long history of conflicted payments structures and limited visibility of the processes adopted in the industry. Which have led to instances like CFS Private wealth, where the adviser unflinchingly moved the client's investment money to his account. Whereas there have also been instances where advisors due to the non-availability of the right tools and platforms, to assist them in the advice process, happen to give non-compliant advice that has left customers in worse-off. Such instances have been far from few.

These instances have chipped away the trust and created a general perception that cast doubts on the advice industry. Thus, there is a need to focus on steps to rebuild it. One way to build trust is through bringing in the right platform in the advice process that enhances the transparency of the advice. Also, the platform should ensure that once the advice is dispensed, the advice should be immutable.

1. Transparency of advice: The advice process should enable customers to understand the full impact of the advice, and this can be achieved by enabling customers to access the advice documents throughout the advice lifecycle. This will provide enough opportunity to them to review and raise their concerns. The advice platform should enable customers to review the advice at various stages before accepting the advice. This will bring information equity between advisers and customers and will go long way in restoring the trust as customers will feel more empowered.
2. Immutability of advice information: There have been instances in the past when the advice information to the client has been tampered with to avoid scrutiny by law enforcement agencies. While organizations can put required controls in place to avoid such instances, however, there is a need to bridge the trust gap. The technology platform for the advice industry needs to ensure information immutability and help regain the trust of customers in the systems and processes.
3. Alignment with customer’s goals: Last but not least the advice platform has to map the advice to the goals of customers. This will ensure that advice is in the interest of customers, and the adviser will be able to demonstrate how it will help customers in achieving their goals.

While regaining the trust is not going to be a cakewalk for the industry, and we definitely should understand that it took over 30 years for the industry to find itself out of favor with customers as well as regulatory, but steps taken in the right direction and investment in the right technology will enable the industry to not only regain the trust but to achieve the ultimate objective of being the bedrock of a thriving community.