Client debts soar as recession bites

Digital wealth portal myprosperity said the quantity of debt recorded by advice clients using its software had increased by almost 200 per cent since the beginning of 2020, to $12 billion in total.

Since late 2019, the group said the number of credit card accounts being used by clients had also increased by 80 per cent, according to data from the myprosperity portal.

Myprosperity founder Peter McCarthy said with more than 35,000 clients now using the platform, and many struggling under significant amounts of household debt, it seemed the value of financial advice was becoming clear to more Australians under financial strain.

“The increase in liabilities recorded on the myprosperity platform, combined with climbing usage figures, demonstrates that there’s growing concern over managing debt,” Mr McCarthy said.

“People are seeing the need to keep on top of their money during these tough times.”

Mr McCarthy added that clients using the portal were most interested in getting a better hold on their finances and their retirement planning in the wake of the COVID-19 recession.

“For households, we’ve seen a significant spike in requests around assistance in financial management, retirement and estate planning, highlighting the increase in concern around financial health,” he said.

“These troubling times suggest people are looking for advice to help stem the loss and shore up their financial future.”

The group said it had also seen a marked increase in take-up of a number of myprosperity’s digital administrative tools for advisers as more practices adapted to working remotely.

“The use of online forms – or digital fact finds, tax checklists and onboarding forms – which help advisers digitise the engagement process by eradicating paper to streamline data collection, has increased by over 500 per cent since December 2019,” myprosperity said.