What is your financial advice worth?
For me, the recently announced research findings from Investment Trends that suggested that advice is worth about $300 confirms the misconceptions that abound in the minds of advisers, customers, institutions and research houses about financial advice.
Imagine if a research group produced a report saying that, in the opinion of their survey-takers, the average car should cost $10,000.
How ridiculous would it be, if based upon those research findings, the media, consumer groups and even some car makers, started bashing politicians (and whoever got in their way) about how ordinary Australians are getting ripped off being forced to buy over-priced cars and that cars of today are beyond the reach of most Australians. (Ironically most Australians see so much value in their car purchasers they are prepared to go into expensive debt and finance arrangements to fund their desire).
Unfortunately, the perception of most is that advice is a product. It isn’t.
Consider drug companies and doctors. Drug companies deliver products whereas doctors deliver advice.
Consider builders and architects. Builders deliver a product whereas architects deliver advice.
Consider airlines and travel agents. Airlines deliver a product whereas travel agents deliver advice (this is a great example of recent times with only the great travel advisers surviving recent price wars).
Despite being portrayed and offered by many, displaying financial advice as an optional extra on the list of available products is as ineffective and misguiding (almost corrupt) as offering guaranteed good health by buying a bottle of pills.
Advice isn’t a product. Don’t pay much attention to anyone or anything that simply confuses you to consider advice as a commodity.
What do you think?