Consumer trust in the financial advice industry remains low but Australians are hopeful that regulatory changes will turn things around, according to a new report.
In its 2019 Direct Client Report, Investment Trends surveyed non-advised Australians on what they think about financial advice, investing and digital self-help tools.
The research found that financial planners and banks have yet to regain the full trust of the Australian public post-Royal Commission.
The average Australian gave financial planners and banks the same rating of 4.8 out of 10, when asked to rate their level of trust, similar to levels seen in 2018.
“Consumer trust in financial planners and banks remains at the all-time lows that were reached in 2018, hovering in the ‘distrust’ zone below a score of five out of 10,” said Investment Trends Senior Analyst, King Loong Choi.
“While confidence in the financial advice industry is low, Australians are optimistic that changes are underway.”
“Consumer trust in financial planners and banks remains at the all-time lows that were reached in 2018…”
He said the majority of respondents (76 percent) expect the regulatory changes proposed by the Royal Commission will bring about positive improvements for the industry, with “…most often expecting more severe penalties for adviser malpractice, greater fee transparency and improved professionalism,” said Choi.
The report also found that digital self-help advice tools are popular, with 54 percent of non-advised Australians indicating they are interested in using online tools to help them make superannuation, insurance and investment decisions.
“The demand for digital self-help advice tools reflects Australians’ growing range of unmet advice needs, which centre around strategic advice, buying property and post-retirement issues,” said Choi.
“While there is healthy appetite for online advice tools, converting interest into actual usage will require these tools to satisfy a core set of demands. For instance, non-advised Australians strongly prefer tools that blend digital engagement with human assistance, with the younger cohort being most open to receiving human support when using online tools,” explained Choi.
The report noted that online tools can also be an effective referral mechanism for advisers, since 53 percent of non-advised adults who are interested in using these tools say they are happy to be referred to a financial adviser if their financial situation required expertise beyond the scope of the tool.
The research also found that there is growing demand for consolidated reporting tools that allow users to see all their financial accounts and holdings in a single webpage or app (cited by 46 percent of non-advised Australians, up from 41 percet in 2018), particularly among younger Australians.
“Australians generally have ongoing relationships with more than one financial institution – their main day-to-day bank may not necessarily be their mortgage lender or investment platform,” said Choi.
“Each of these providers deliver information and reporting, but many Australians would like a convenient way to view their entire financial situation across all accounts, all in one place.”
The Direct Client Report is in its fourth year and drew on the responses of 4,501 Australian adults.