Financial Planning Just for the Rich

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Australian consumers generally perceive that financial advisers will only work with high net wealth clients
  • Agree (66%)
  • Disagree (22%)
  • Not sure (11%)

Almost three quarters of advisers agree with the notion that Australian consumers think financial advisers will only work with wealthy clients.

This is the outcome to date in our latest poll, which asks advisers to walk in the shoes of the vast majority of Australians who do not qualify for ‘high net worth’ status. So far, 72% of our poll respondents think the majority of Australians see the services of financial advisers directed only towards the wealthy. Almost one in five advisers (18%) disagree with this contention, while 10% remain unsure.

This poll is considering issues beyond the question itself. For example, if the 72% of advisers are correct, then why does the average consumer have this view? Does it stem from the consumer perception of the role of the financial adviser, or does it relate more strongly to the consumers perception of themselves – as not representing someone whose circumstances merit financial advice?

One comment we received has offered a realistic evaluation of the current consumer environment:

“The issue we probably have is how much benefit will the clients get. If the benefit is growth in funds or saving from having better structured insurances, or a saving in tax, it takes time to let this be realised. And if the costs or fees to set this up erode a lot of the initial benefit, the lower level consumer can’t see the actual benefit to them.”

If this is a realistic assessment, does it mean there should be a greater focus placed on how advisers can profitably serve the more basic planning needs of consumers, such as budgeting strategies and cash flow management (see also: Fear of Advice Holding Industry Back)?

The same adviser commented that these consumers are “… unlikely to engage with us. I believe just talking to people, identifying the assets they have, making them aware of the risks in life, is a start mark that can be built on…”

Do you agree that more focus could or should be directed to the more simplistic planning needs of the majority of Australian consumers, and pegged as a starting point for further conversations and advice over time? Or do you think there is little opportunity to serve this function as well as operate a financially successful advice business?  Tell us what you think, as our poll remains open for another week…



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4 COMMENTS

  1. Well, if a level playing field was applied to IFS and On Line Insurance Product then no one other than the Rich would get advice. Advisers did set out to service the elite; Bill Shorten and his mates created the class barrier.

  2. Many people are confused and dare I say it, a bit embarrassed with their lack of understanding on financial issues. Budgeting is one of those jobs to do, though seems to always be tomorrows task and many people think, if I am struggling to make ends meet now, how can I afford to pay a adviser and invest money I don’t have.

    If we could educate people to take the first step without fear and make it that advisers can easily and in a few minutes, provide a simple service to start them on the road to financial freedom, then this issue would be heading in the right direction to being solved.

  3. We have addressed this issue in our business tag line – Houghton Strategic Solutions – Financial Planning for Real People – and have a diversified client base of Wealth Creators through to Pre-Retirees and Retirees.
    It is absolutely true that many people think that Financial Advice is for the wealthy.
    It is also absolutely true that many advisers don’t want to bother with the non-wealthy.

    In the Fee for Service world, it shouldn’t matter how much a client has, as long as they are willing to pay for the service they need, and we can provide a benefit that is worth paying for.
    The industry needs to break down this negative perception, and start working with people who need advice, at all ages and stages.

    My question is – if they are already wealthy do they really need us as much?

    • HNW might be interested in dealing on a “success fee” basis which doesn’t necessarily entail “outperforming” the market…..challenge seems to be that the regulatory environment has overlaid a level of complexity & cost that is not valued nor is it affordable. Subsequently many advisers are struggling to “justify” their fees rather than building an offer that meets clients needs & pricing accordingly…..giving clients what they want certainly sounds like a better place to start than “this is what I charge”!!

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