Deluded investors too smart for advice

Many people wrongly think they don't need financial advice because they over-estimate their own intelligence, an expert on financial adviser marketing says.

Wednesday, February 29th 2012, 6:00AM 1 Comment

by Niko Kloeten

Michael Morrow, a Canadian adviser who founded IdeasForAdvisors.com, spoke at last week's MDRT seminar in Auckland about the challenges of marketing financial advice to an often apathetic public.

The seminar on Friday was the third in three days, the previous two being held in Christchurch and Wellington.

Morrow said advisers face many of the same challenges people in other industries encounter when trying to sell a product or service.

"The number one reason people do not buy is because it's easier to do nothing," he said.

To overcome this, he said advisers have to convince people of the need for their services.

"It may be true that you can lead a horse to water but you can't make it drink. However, you can add salt to the horse's oats and you can make it thirsty."

Morrow said one of the biggest obstacles to convincing people they need financial advice is that many think they are more intelligent than they actually are.

He cited research that found 87% of people think they have above-average intelligence.

"Everyone that you talk to thinks they are smart and don't need your advice."

And Morrow had another message for advisers- there aren't many "money-making" hours in a year.

He said a 40-hour week would theoretically give 2000 billable hours a year but he said 10% of time at work is wasted, dropping it down to 1800, and about a third of that time is spent on running the business, which is essential but doesn't actually bring in any money.

"You've got only 1200 hours that are money-making hours. If you look at your hourly rate times 1200 instead of times 2000, you would probably look at it differently."

He said it's important to have clients who become "advocates", promoting your business for you.

One of a number of marketing ideas he suggested was sending people calendars, noting research that found 76% of people who got sent calendars had them displayed prominently in their home or business.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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Comments from our readers

On 3 March 2012 at 1:30 am Andy said:

I find it difficult to accept that, without endorsement or constructive promotion from the FMA, 87% of investors will prefer to come to advisers and pay for the privileged rather than go to a bank and pay nothing and get "safe" investments. That is why 80% of the wealth is held by 20% of the people. That is also why we only need enough advisers to cater to that 20% - because the other 80% think they can do it themselves better than we can do it for them.
In short, if we are to improve the financial literacy of kiwi's, the FMA needs to promote our industry, and start educating kids on fiscal intelligence rather than telling them how important the latest ipad or mobile phone is.