Advice Considered a Low Priority for Consumers

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Financial advisers are competing with inertia and time-pressures in their efforts to have more people engage with advice while current levels of advice are not likely to change for some demographics, according to an award-winning adviser.

Henderson Maxwell CEO Sam Henderson
Henderson Maxwell CEO Sam Henderson

Henderson Maxwell chief executive, Sam Henderson, said efforts to expand advice beyond one in five consumers had appeared to have stalled despite the growing level of free information around financial literacy and financial advice.

Henderson, whose firm won the Association of Financial Advisers 2016 Practice of the Year award, said the limited growth in advice was not related to the advice itself but the ability for people to find time to seek advice.

“There is plenty of free information out there for people to educate themselves, but at the end of the day, financial well-being is simply not going to be a priority for a majority of Australians because they have other things on their minds,” Henderson said during a media briefing hosted by Zurich.

“…financial well-being is simply not going to be a priority for a majority of Australians because they have other things on their minds…”

“Look at young families – may have a pile of debt and may want to live in lovely suburbs and work in great jobs, but they are too busy and doing what they need to do to execute all the things they have got to do,” he said.

Henderson said expanding past the one in five people who currently receive advice may become more difficult as further regulation and costs impact advisers.

“The demographic in which a lot of financial advisers want to work is probably covered not too far outside the existing 20% of people who receive advice,” Henderson said.

“How do you provide advice to the masses at a profitable level? It is hard enough right now to provide advice at a profitable level when we are getting squeezed on fees and regulation,” he said, adding, “We would like to but how do we do a one to many advice strategy, that is the challenge many of us struggle with.”

The 2016 AFA Adviser of the Year, and principal of Align Financial, Darren Johns added to Henderson’s comments stating that many people who do end up seeking advice do so because of a trigger point, such as retirement.

“Most of the prospects who call us have done so because of an event or catalyst, and we ask then ‘why now’? Nearly always there has been something that needed attention for months or years,” Johns said.

“They are conscious that they have known for a good period of time that it needs looking at but it was busted enough for them or were there other things to do?”



2 COMMENTS

  1. Great comments from both and “hitting the nail ” on the head so to speak
    You have to do an annual tax return ! It’s the law ( for most anyway! ) you are not under any pressure to take out life insurance ! Hence it is not a necessity at the moment. As mentioned it usually does not happen unless there is a “triggering” to launch a response like a death in the family or some terrible traumatic incident that has left a family in serious financial difficulty I for one am sick of having to go to the Friday night ” whip around” by well intentioned friends to provide a little cash for a short time particularly when a few tax deductible dollars spent each month would have resolved the financial issue st least
    Here’s a thought make it compulsary !! Like doing your tax
    Maybe then the underinsursnce issue might have a real ” chunk” bitten out of it, plus make all Insurance’s tax deductible regardless of working status this would also add to the addressing of an issue few Australians understand
    I’m the 70’s life insurance was deductible
    Just s thought !

  2. The direction the Financial Planning Industry appears to be heading, seems to be
    based upon a utopian path of imagination, whereby all Australians will wake up
    tomorrow and realise that they need Financial Planning advice and will seek out
    University Qualified experts in every field, whether it be simple risk only Life Insurance, superannuation advice, estate planning, debt and investment planning and all Australians will be excited to pay thousands of dollars to each of these experts so they can learn everything there is to know about these areas.

    The real world is that people are busy and the vast majority do not have sufficient interest to pay thousands of dollars for something they feel is too complex to understand.

    Let us as an Industry, be honest enough to ask ourselves and maybe even ask
    Australians, if they actually understand the legalistic terminologies inside the documentation we are forced to give them and if they feel the hundreds of pages of PDS’s / SOA’s, make it easier, or harder for the 80% of unadvised Australians, to then want to go and seek out advice.

    If we have a quick look at the Day Care industry as an example of good intentions
    going bonkers.

    When we sent our kids, it cost us $14 per day and these centres were well run.

    Then the vested interest lobby groups got involved and sold the Government the
    brilliant idea of higher education for carers looking after one to four years olds.

    What we now have is 800% higher costs to parents, though when parents stated they
    could not afford these higher fee’s, the Government introduced a wonderful subsidy system, whereby the Tax payers could fork out multi Billions of dollars to subsidise an Industry that had been pretty self-sufficient.

    This then allowed the likes of ABC learning to cause financial mayhem.

    Today we have a child day care system that is becoming too expensive to use.
    Congratulations to all the guru’s and Government beaurocrats who through their
    efforts, have put more financial pressure on parents and Treasury.

    Can we see a parallel universe occurring in the financial services industry?

    The winners as usual, will be the education Industry and the Lawyers who can
    magically turn something simple, into a convoluted, expensive maze where all who inadvertantly enter, cannot leave until they are given expert advice, at a fee of course.

    The answer is simple, though would be vigorously attacked by the Education / legal
    lobbyists.

    If we want more people to get advice, then make it easy to understand and if it is
    easy to understand and implement, the cost will go down, making it more affordable for all Australians to access.

    What are we doing is the exact opposite, so the Governments grand plan for Australians to be able to access quality advice at affordable prices, will end up like the day care industry, a hugely expensive beaurocracy which costs participants and the Australian Tax payers, multi Billions of dollars for an end result of; less participation.

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