Practical Applications of A Move in the Right Direction: Client Relationships in Financial Advice

Abstract

In A Move in the Right Direction: Client Relationships in Financial Advice, from the Summer 2022 issue of The Journal of Wealth Management, authors Katherine Hunt, Mark Brimble, and Brett Freudenberg of Griffith Business School conclude that Australian financial advisors must continue to forge deeper connections with their clients and address areas of concern on both an industrywide and a personal basis. The authors explore the determinants of relationship quality between Australian financial advisors and their clients. They utilize 2016 surveys of financial planners and consumers to assess perceptions of the advisor–advisee relationship, such as perceptions of trust and engagement, and chart how overall relationship quality is impacted by six factors: trust, engagement, commitment, client activity, ownership, and empowerment. They compare the results with data from their identical 2009 study to demonstrate a general increase in relationship quality, driven primarily by growth in engagement, trust, and commitment. Additionally, they divide survey results for both clients and advisors by demographic characteristics, including gender, age, education, and income, to provide control variables and assess the degree to which measures of quality vary by subpopulation. Overall, shifts in client and advisor perceptions between 2009 and 2016 can be attributed to many factors, including continuing industry regulation, increased professionalism among advisors, demographic shifts in clientele, the introduction of robo-advice, and deeper communication between clients and advisors.