The formula for success in receiving any professional advice is the quality of that advice and how it is communicated to you. Good advice poorly communicated will leave you lacking.
A recent Ipsos poll conducted for Manulife provided two interesting statistics on financial advice.
First, one in three Canadians have a financial adviser.
We would naturally assume those clients are being well served. Apparently, that is not always the case.
Which brings me to the second point. Of those who have a financial adviser, approximately half of them only understand mostof what their adviser is saying. There are some things they don’t understand.
From my own observations and feedback from many investors over time I can say that advisers use too much industry jargon. Words, and acronyms, they fully understand but unfortunately their clients do not.
In some instances, a client, not wanting to appear unknowledgeable, may be too embarrassed to ask for clarification.
If for example the client does not understand the importance of saving for their children’s post-secondary education, or planning for retirement, then those two important life objectives might not be realized.
In a perfect world an adviser would have perfect communication skills. We know from the study and experience that this is not always the case.
So, the challenge to receiving good financial advice is to have good financial communication.
Good communication is the responsibility of both parties.
Advisers need to remember who they are speaking with and to speak clearly and in everyday language. They need to pause during a conversation and ask, without judgement, if they are being understood. Then ask the client to put in their own words what has just been discussed.
The client also plays an important part.
If a client does not fully understand what is being said they should ask the adviser to clarify.
Receiving good financial advice plays an important role in helping you achieve your most important life goals. Good communication between a client and their adviser is critical.