When putting together this comparison it was necessary to complete an in-depth analysis of data on the AdviserRatings website. Here’s a comparison of MyNextAdvice vs AdviserRatings based on key issues.
MyNextAdvice vs AdviserRatings – Principal Purpose
AdviserRatings is a reasonably well-known rating and review platform for financial advisers in Australia. Its principal purpose is to help advisers enhance their online profile, generate new leads, and ultimately to provide the site operator with a source of data that can be monetised and onsold to third parties for profit.
On the other hand, MyNextAdvice is a software service designed to help advice businesses achieve performance improvement in the areas of growth, efficiency, and compliance. It relies on client feedback to generate data but that’s where any similarity with AdviserRatings ends. Advisers seek feedback from all of their clients because that’s the right thing to do to ensure good outcomes for every client. It also provides an authentic measure of performance to drive continuous improvement.
Unlike AdviserRatings, MyNextAdvice does not publicly disclose nor onsell the collected data.
MyNextAdvice vs AdviserRatings – Business Model
MyNextAdvice operates a fee for service business model where users pay a monthly or annual subscription to utilise the service. This recognises the intellectual property developed by MyNextAdvice to collect relevant data from clients, and its ability to convert the data into insights that are used, together with unique tools, to achieve improved performance in the areas of growth, efficiency, and compliance.
On the other hand, advisers can access the AdviserRatings service for free. That’s because the ultimate goal and business model is to monetise and onsell their data to third parties. If advisers aren’t paying for the product it’s highly likely they are the product.
MyNextAdvice vs AdviserRatings – Basis of Rating
Rating and review sites rely on facilitating feedback from clients about adviser performance based on a simple and often small set of questions. Responses to those questions are then converted into a star rating to make it easy for consumers to review. How those questions are designed and whether they measure the most relevant performance variables (based on science) has a profound impact on the quality and credibility of the ratings.
For the rating to be meaningful and valuable to consumers, it must measure key variables that, at a minimum, drive only good consumer outcomes. By way of background, our expertise lies in measuring client relationships with advisers and that has been informed by rigorous academic research and many years of practical application in financial advice and other industries.
In the case of AdviserRatings, the 5-star client rating is calculated as an average of all client reviews given to an adviser based on 4 variables which are scored as a percentage and converted into a star rating:
• Communication (how often the client could clearly understand the advice provided and the explanation of how it fitted the client’s needs)
• Knowledge and expertise (how confident the client is that the adviser’s knowledge and experience was broad enough to permit the adviser to dispense the best advice)
• Customer care (how often the adviser was able to give the client their full care and attention when they needed help)
• Recommendation (how likely the client would be to recommend their adviser to others)
The likelihood to recommend question has very limited value and its premise has been widely discredited as a useful and reliable indicator of performance. Including the other variables in the calculation goes some way to mitigating this issue but doesn’t go far enough. The remaining variables are all somewhat relevant in the delivery of advice but only go part of the way to accurately representing adviser performance and consumer outcomes.
There are many other variables that should be measured and MyNextAdvice utilises a wider range of variables that are statistically proven to more accurately reflect performance and resulting client relationship intentions.
It should also be noted that a rating is a single metric and offers very little value to the relevant adviser in terms of identifying specific underlying performance gaps, financial impact, and actions required to improve performance. It is essentially a tool designed to attract interested consumers, just as a lure is used to attract fish, but nonetheless has to be carefully designed to catch the right fish.
The best solution is one that saves valuable time and effort, is already expertly developed and designed to support your advice business, and delivers powerful, actionable insights you can immediately use to improve performance. When you ask clients for their feedback you only get one chance, so it’s important all clients get the opportunity to participate and you get it right the first time. MyNextAdvice respects your time and priorities by making it convenient, quick and easy to deploy a purpose-built client survey to collect data directly supporting your practice’s growth, efficiency, and compliance goals.
“New surveys are in development that will help users monitor, understand, and demonstrate compliance with their legal obligations such as the FASEA Code of Ethics, Best Interests Duty, and Code of Professional Conduct”
MyNextAdvice vs AdviserRatings – Credibility
As noted earlier, the integrity of the results can be impacted if participating advisers rely on being reviewed on a limited number of performance variables. This problem is compounded if the feedback is deliberately encouraged and sourced from only a small proportion of an adviser’s clients to generate a high rating. In other words, to ‘game’ the service.
Average ratings have become a significant factor in consumer decision-making, so it’s critical the rating system is solid and has efficacy, and those being rated behave ethically when using such services (even if it is solely for their own benefit).
In the case of AdviserRatings, an analysis of available data raises serious concerns about the motives and credibility of the advisers who currently rely on a single rating to promote their advice performance. Of the overall 2,344 advisers who have been rated by clients to date, more than one third (799) only have 1 rating and, of those, 70% are rated 5 stars. Only 5% are rated 4 stars or less.
76% of rated advisers have 10 or less client ratings and only 2.7% have 50 or more client ratings.
In Australia, the general view is that each full-time equivalent adviser is capable of servicing about 120 clients (more if the scope of advice is narrow). So, in order to determine how many individual reviews an adviser would need to ensure the resulting ratings are representative of the views of their client base, the sample size would need to be 91 (at a confidence level of 95%). This means each adviser with a client base of 120 would need to obtain reviews from 91 of their clients in order to infer the accuracy of their ratings at a 95% confidence level.
Based on our analysis, only 21 advisers (0.9%) of a total 2,344 advisers with ratings had 91 or more reviews, thereby calling into question the credibility of the ratings and value of the service to consumers.
“A poorly designed (and possibly ‘gamed’) rating system can do more harm than good”
MyNextAdvice vs AdviserRatings – Reputation
In an era of heightened attention by consumers and regulators, advisers need to be very careful about protecting their personal and professional reputations. The Government has already flagged its intention to legislate for the establishment of a Single Disciplinary Body (SBD) from mid-2021 in order to oversee adviser compliance with the FASEA Code of Ethics which became legally enforcible from 1 January 2020.
In fact, from that date, every adviser must demonstrate, realise, and promote the values of trustworthiness, competence, honesty, fairness, and diligence. It is difficult to conclude this would be the case if an adviser deliberately ‘games’ a ratings/review service for their own benefit. Standard 2 of the Code requires all advisers to act with integrity – this requires openness, honesty and frankness. Standard 12 requires each adviser to uphold and promote the ethical standards of the profession and hold each other accountable for the protection of the public interest.
MyNextAdvice is a vehicle for advisers to collect valuable feedback from each client across all key performance variables to authenticate performance. Advisers who credibly perform at a high level based on the feedback of all clients (not just a select few) deserve to be rewarded and to maintain their reputations intact with consumers and regulators alike. MyNextAdvice is uniquely positioned to help advisers not only demonstrate their compliance but also to improve their performance, enhance their reputation, and grow their business.
Compared to AdviserRatings, MyNextAdvice provides a number of unique features and benefits:
- Don’t publicly disclose, monetise, or onsell your data to third parties.
- Respects your time and priorities by making it convenient, quick and easy to deploy a purpose-built client survey to collect data directly linked to your growth, efficiency, and compliance goals.
- New surveys are in development that will help advice businesses monitor, understand, and demonstrate their compliance with legal obligations such as the FASEA Code of Ethics, Best Interests Duty, and Code of Professional Conduct.
- Facilitates above-average response rates so insights deliver more value.
- Encourages continuous client feedback across the entire client base to ensure timely insights and follow up actions – particularly important to meet and demonstrate compliance obligations.
- Surveys are underpinned by strong science focused on helping users understand their client relationships and how they are connected to commercial success.
- A proprietary metric measuring the strength of each client relationship (StoRI™ Score) is used to monitor and benchmark performance as a first step towards taking decisive action.
- Provides a window to view the impact of survey results on future financial performance, ensuring users can make better informed and confident decisions about their client relationships and overall advice business.
- Provides the data, insights, and tools that enable advice businesses to confidently plan and decide what the next best steps are for performance improvement.
- Helps advice businesses to take action.
Note: All data used in this post was analysed as at 18 October 2020. If you have any data/information (not personal opinions, assertions or hearsay) to rebut any of our conclusions, please get in touch.