Resonating with Riskinfo readers this week was our report on latest research highlighting the ongoing issue around the relative cost of financial advice for every-day Australian consumers…
Research firm Investment Trends has released its 2022 Financial Advice Report, highlighting that affordability remains the primary barrier to Australians seeking financial advice.
The study explores the changing advice needs of Australian adults, their main concerns, and how advisers and super funds can best support clients. This year’s study also explores Australians’ thoughts regarding digital advice solutions.
Concerns about finances
…91% of Australian adults have concerns about their finances
According to the 2022 report, 91% of Australian adults have concerns about their finances, with rising inflation front of mind (58%, up from 42% in 2021), and that affordability continues to be the main hurdle to seeking advice.
The research firm notes Australians have significantly stepped up the amount they are willing to pay to plug their advice gaps (28% increase this year to $770 on average for limited advice), but that this is still a far cry from advisers’ estimate of the cost to produce that advice ($2,070 on average).
Investment Trends Research Director, Dougal Guild, noted the unmet advice needs across many financial topics depending on demographics: “Younger generations need support deciding where and how to invest their money, buying a home,” said Guild, “…as well as managing their cash flow whilst older generations are focused on retirement considerations and aged care.”
Advice gap
the advice gap is widest among younger adults
The report estimated that 12.4 million Australians have unmet advice needs and that the advice gap is widest among younger adults, with 81% of Australians aged between 18-34 years old indicating they have unmet advice needs, and only 18% having sought financial advice in the last twelve months.
“Two in three Australians are open to using a digital advice tool to plug advice gaps, although most would prefer to use in conjunction with some form of human interaction,” said Guild, adding: “We may also start to see super funds having a larger role to play in addressing the advice gaps with a large number of members surveyed open to seeking advice from their super fund but many unaware of services available. A sizeable portion of members are also unaware of intra-fund advice solutions available as part of their memberships, presenting an opportunity for education.”
Client engagement
The research further revealed newly advised client numbers have outpaced client attrition for the first time in three years, but that a growing number are considering stopping using or switching advisers, citing the following key reasons:
- Unhelpfulness (31%)
- Unclear fees (27%)
- Slow to respond (28%)
The report reveals more than four in five clients want advisers to proactively support them throughout the advice journey, and that online portals have proven to be an effective means to demonstrate progress and keep clients engaged with the advice they are receiving.
“Advisers must sharpen their focus on key areas to shore up client loyalty and client acquisition. Understanding loyalty drivers is key to both curtail client attrition and maximise client acquisition,” said Guild.
