OFERTA EDUCATIVA

This section presents the results for the research question:

RQ3c: How do levels of need arousal lead to differences amongst the decision making task of criteria for evaluation?

In line with the results of the qualitative phase the criteria for evaluation have been broken into three components, The Plan, The Planner and The Organisation. The plan component comprises criteria mature consumers use to evaluate a financial plan when making a decision. The planner component is the criteria used to evaluate the mature consumer’s relationship with the planner. The organisation component is the initial phase of information gathering. It relates to the importance of criteria mature consumers use to ascertain the reputation of different companies. In this section these three components will be discussed in the aforementioned order. Discussion will begin with an additional section regarding the perceived importance of the overarching three

criteria. It is theorised that the participants will go through the decision making process differently depending on their need category.

The groups of criteria are:

1. Overarching - Table 4-20, page 172 2. The plan - Table 4-21, page 174 3. The planner - Table 4-22, page 177 4. The organisation - Table 4-23, page 179 A note on the ranked order of criteria

After the initial pre-test it was discovered that given the opportunity to rank the importance of the criteria all mature consumers ranked each criterion either a 6 or 7, signifying very important. Whilst this is a valuable finding in itself it did not allow for an understanding of which criteria were more important. No rating of sensitivity could be obtained from the data. It could be argued that there were in fact negligible differences between criteria. However it was considered more likely that the data collection method required alteration. As a result the criteria sections of the survey were then altered to produce a ranked order test: If all criteria were considered equal then this would still be evident in the results of the ranked tests. This was not the case. The three sections were arranged to reflect the three main criteria. Participants were then asked to rank their most important 1 to least important 7. This allows for discernment of the criteria within the sections (ranking 1 - 21 was too difficult a task for respondents). Note that the magnitudes of the numbers presented in this section are effectively reversed.

Most important criteria are ranked first with a (1). Thus averages closer to one imply it is more likely to be important.

4.5.6.1 Overarching Criteria

The criteria were grouped into three sections: Firstly the reputation of the organisation.

Secondly the plan, the appropriateness and effectiveness of the plan. Thirdly the planner, the importance of the relationship between participant and the planner.

Participants were asked. “If you were considering choosing a financial planner for the first time or switching to another financial planner what would be most important to you in your choice: The organisation, the plan or the planner? All data was ranked 1 most important to 3 least important. Mature consumers consider the plan itself to be the most important criteria followed by the planner and lastly the organisation’s reputation. Only one need category is an exception to this pattern of plan-planner-organisation: Latent Need (retiring) consider the reputation of the organisation more important than their interaction with the planner.

Table 4-20: Holistic reputation ranked

Rank - Financial

Plan (the plan itself) Rank - Financial

Planner (person) Rank - Organisation

Mean σ Mean σ Mean σ

Activated Need (retiring) 1.75 0.72 1.83 0.80 2.42 0.77

Met Need (not retiring) 1.84 0.73 2.05 0.82 2.11^* 0.89

* p < 0.05 - ^** p < 0.005 - Statistically significant differences between need arousal groups and the remainder of mature consumers are depicted by stars in the Table 4-20.

Latent Need (not retiring) consider the plan a more important criteria than others and the planner less important than the remainder of the sample. Whilst unlikely to actually purchase this type of product Latent Need (not retiring) are more likely focus on the details of the plan rather than their relationship with their planner. Latent Need (retiring) are more likely to consider the organisation’s reputation as more important when

compared to the remainder of the sample. They are also less likely to consider the planner an important criteria a similar predisposition to Latent Need (not retiring). A focus on the financial details and a reduced consideration of the role the people involved play in the process. It does however alter the order of importance indicating even more distrust for the people in the industry.

These are considerable findings. This category is the least likely (latent) to consider they need financial planning. Their impression of what denotes important criteria are quite different to other mature consumers. Latent Need categories focus on the perceived detail of their investments and reputation of the organisation. They view them as more important than the relationship with the people involved in the process. Met Need (not retiring) consider the reputation of the organisation a more important criterion than the remainder of the sample. However it is still the least important criterion of the three.

4.5.6.2 Criteria - Financial Plan

This section presents the results pertaining to what mature consumers consider the most important criteria for a financial plan. Participants were asked, “When considering a Financial Plan, please rank the criteria from 1 most important to - 7 least important?”

The results of the section are shown in Table 4-21.

Table 4-21: Financial Plan Criteria

* p < 0.05 - Statistically significant differences between need arousal groups and the remainder of mature consumers are depicted by stars in the Table 4-21.

** p < 0.005

Overall mature consumers rank the plan related criteria in the following order of importance:

1. the plan suits their needs 2. their capital is secure

3. the level of risk is acceptable

4. the level of performance (return on investment) over time is acceptable 5. all fees and commissions are reasonable

6. the written recommendations make sense

7. the products offered are independent of the organisation offering them The order presented above does not however tell the complete story. Whilst plan suitability and secure capital are ranked first and second, their importance as measured by the relative means are almost equal. The same can be said for the items ranked third and fourth. An acceptable level of risk and an acceptable return on investment are equally important. Again the same can be noted for the final two items. It is equally important that the ‘recommendations are understandable’ and the ‘products are independent of the organisation offering them’.

The Latent Need (not retiring) category are less likely to consider the independence of products offered by advisers an important criterion. They are more likely to consider the security of the investment an important criterion. This is consistent with their profile of a more cautious investor. Similarly Latent Need (retiring) consider the security of the investment a more important criterion than other mature consumers.

Recognised Need are less likely to consider the ‘recommendations making sense’ as an important criterion. When coupled with previously described results it suggests a reduced understanding of the financial industry. However this in itself shows some level of understanding for the market. Most financial planning relationships are essentially agency roles for investments that clients can not fully comprehend.

Activated Need (not retiring) rank the security of the initial investment lower than the sample. Thus suggesting an increased tendency for risk due to the distance between retirement and their current situation. Activated Need (retiring) are less likely to consider the recommendations making sense as an important criterion. This indicates a level of trust for the work of financial planners and potentially an understanding that comprehension is not necessarily a prerequisite for financial security. Perhaps they do not need to understand the products provided but are confident in their ability to monitor the end result.

The Met Need (not retiring) category consider understanding the plan’s recommendations more important and the performance of investments less important.

This suggests an increased requirement to know what is happening rather than an impetus towards better performing investments. In essence a need for control and disbelief that high performing investments are not always what they appear. Met Need (not retiring) would rather know how their money is invested when compared to other mature consumers.

4.5.6.3 Criteria - Financial Planner

The relationship between the financial planner and the mature consumer will be analysed in this section which presents the criteria developed to evaluate alternative options. Participants were asked the question. “When considering a Financial Planner please rank the following criteria from 1 most important to - 7 least important. The results are shown in Table 4-22.

Table 4-22: Planner Criteria

Rank Planner is trustworthy provides evidence of

* p < 0.05 - Statistically significant differences between need arousal groups and the remainder of mature consumers are depicted by stars in the Table 4-22.

** p < 0.005

Mature consumers rank the planner related criteria in the following order of importance:

1. is trustworthy

2. offers independent advice

3. provides up to date information regarding the marketplace 4. provides evidence of success in the past

5. is able to refer me to other specialists if need be 6. and I get along

7. recommended from friends and/or colleagues

The order again does not provide a true reflection of the relative importance of planner related criteria. Whilst ‘trustworthiness’ is by far the most important criterion followed by ‘independent advice’ the remaining criteria are all relatively equally important. They are considered substantially less important than the first two criteria. It is interesting to note that the criterion of independent advice is important when it comes from a planner but not ranked as highly important in terms of the plan as described in Table 4-21. A true comparison, of course, cannot be made as they appear on different ranked order lists, this discernment by mature consumers is interesting nonetheless.

Latent Need (not retiring) consider the ability of the planner to refer them to other specialists is more important whilst the personal relationship with the planner is considered less important. Similarly Latent Need (retiring) are more likely to see the ability of the planner to refer clients to other specialists as more important. This is consistent with their profile. They do not consider a financial planner as necessary.

Up to date market information is not as important for Recognised Need neither is the ability of the planner to refer clients to other specialists. This correlates with the suggested profile of a group who is searching for information widely and is less likely to trust that of a financial planner.

The Actuated Need category is more likely to consider past performance and recommendations from friends as more important criteria. Supporting the lack of

decision making ability for this category. They prefer using referrals to other people which implies a reliance on the opinion of others rather than the ability to make a decision for themselves. Whilst they do look for information that would be considered important, ‘past performance’, there are issues with this as well. Past performance is not an indicator of future performance and when reported by the planner, performance almost certainly will be in a portrayed favourable light and will require objective analysis.

Activated Need (retiring) are less likely to consider a planner recommended by friends as an important criteria. This category already has a planner and is unlikely to move based on the recommendations of friends, preferring to make the decision themselves.

The personal relationship with the planner is more important to Met Need (not retiring).

This category considers that they are set with the details of their financial plan and are now focussing on the peripheral components which make them feel safe.

4.5.6.4 Criteria - Organisation

This section presents results of the criteria regarding the reputation of the organisation in the mind of the mature consumer. Criteria relating to the organisation were reputation based rather than being centred on client relations. The inner workings of a financial planning organisation were not as relevant to mature consumers when considering

‘choosing for the first time’ or ‘switching to another’ financial planner. Participants were asked the question: “When considering a Financial Planning Organisation please rank the following reputation based criteria from 1 most important to 7 least important.

The results are shown in Table 4-23.

Table 4-23: Organisation criteria

Rank Organisation the press (media)

* p < 0.05 - Statistically significant differences between need arousal groups and the remainder of mature consumers are depicted by stars in the Table 4-23.

** p < 0.005

Overall mature consumers rank the reputation of the organisation in the order:

1. friends and family currently using a financial planner 2. friends in a similar situation to you

3. people you know in the financial industry 4. financial advisors you currently use 5. friends and family generally

6. work colleagues 7. the press (media)

Whilst the order is again helpful it does not provide a true reflection of the results.

Friends and family currently using a planner are considered the best source of information about a financial planning organisation. The next three, friends in a similar situation, people known in the financial industry and financial advisors currently in use are considered of similar importance. The last three are progressively less important to mature consumers with the press being a significant last in terms of importance. This confirms industry sentiment that the referral market is a very strong determinant for purchasing financial services. Nevertheless it must be noted that the organisation’s reputation was considered to be the least important of the three overarching criteria. So whilst the referral elements of the market are very important, mature consumers still regard the elements of the plan and the planner more important. The implication is that they consider the financial details more important even though the readily available information is that from the media and friends.

Latent Need (not retiring) are less likely to rank as important as the reputation of an organisation as presented by work colleagues. This is consistent with their profile. Their work colleagues are less likely to be working in or have substantial knowledge of the financial industry, thus subjectively making them poor information sources. Latent Need (retiring) are more likely to rank the reputation of an organisation higher if presented by friends and family. Suggesting a different kind of information search again. They see the importance, perhaps due to the imminence of retirement and are

prepared to consider the industry. They are however more likely to consider informal sources of an organisations reputation rather than more reliable sources.

Recognised Need are more likely to consider the reputation of an organisation as presented by work colleagues and less likely to rank the reputation from financial advisers currently used. This implies that they work in industries where financial services are more readily used and is consistent with previous findings regarding a lack of trust when dealing with financial planners.

Activated Need (retiring) are less likely to rank the reputation of an organisation as presented by friends and family. They are more likely to rank the reputation of an organisation as presented by financial advisers currently used. This finding furthers the argument that they are taking the decision making process more seriously than others.

Along with more appropriate information-search behaviours they are less likely to consider less reliable sources of information. They are more likely to consider information from financial advisers as an important criteria when swapping a financial planner.

Met Need (not retiring) also rank the reputation of an organisation as presented by financial advisers currently used as a more important criteria. This indicates an understanding of the marketplace similar to that of Activated Need.