The number of consumers engaging with financial advice has fallen by 25% over the past 10 years, but new research from Investment Trends indicates the demand for advice has doubled over the past four years.
The research group has released its 2017 Financial Advice Report which found that currently there are 2.2 million active advice clients across Australia, a 25% decrease from 3 million active advice clients in 2007.
It also represents a decline in the long held figure that 20% of Australians seek advice with the new figures being closer to 12% to 15% of Australians old enough to seek advice, according to ABS data, actually doing so.
Investment Trends Senior Analyst, King Loong Choi said advisers were on average losing three clients for every two they gained but, conversely, satisfaction levels with advice had reached an historical high as advisers took steps to address client retention through better services.
According to Investment Trends, 55% of advice clients rated their overall satisfaction with their adviser as ‘very satisfied’, up from 45% in 2016.
Choi said demand for advice would continue to grow over the next two years and that “…half of Australian adults say there are areas where they would like to be receiving financial advice but currently aren’t, and this proportion has been on the rise since 2014”.
…currently there are 2.2 million active advice clients across Australia, a 25% decrease from 3 million in 2007…
The research conducted by Investment Trends estimates that 3 million Australians intend to seek financial advice from a professional adviser in the next two year, an increase from 2.6 million in 2016 and double the number of people observed in 2013.
“A growing number of individuals with unmet advice needs is fuelling growth in demand for financial advice,” Choi said, adding, “the top unmet advice needs of everyday Australians centre around retirement planning and budgeting”.
Despite this demand, Investment Trends also found a gap between what consumers are willing to pay for advice which was $750, on average, compared to the $2500, on average that advisers were estimated as cost of delivering advice.
Choi said options were available to advisers and licensees to close this cost gap and “…the majority of potential planner clients are open to a range of cost-saving options, ranging from filling in an online fact-find prior to initial consultation to non face-to-face review meetings”.
“In fact, over nine in ten potential planner clients are open to conducting review meetings with someone other than their planner if it meant a reduction in fees,” Choi said.
The Investment Trends Financial Advice Report, now in its tenth year, examines the appetite and use of financial advice among Australian adults and surveyed 9,552 people in July 2017.