Mortgage Choice’s 2014 Money Survey found that of the 1,064 participants interviewed in February 2014, 89.4 per cent said that they do not currently have a financial plan in place created by a professional financial planner.
The survey found that 68.1 per cent of those who did not have a relationship with a financial adviser admitted that they have no intention of seeking financial advice in 2014.
Mortgage Choice head of corporate affairs Jessica Darnbrough said that of the survey participants, almost 50 per cent of Australians said they did not wish to see a financial adviser because they are “comfortable handling their own finances”.
Ms Darnbrough also said the survey showed 16.8 per cent of Australians indicated they would not seek financial advice because they did not have enough assets, while a further 16.3 per cent said they could not “justify the cost”, and 6.8 per cent said it is something they will do “when they are older”.
“These statistics suggest the majority of Australians do not understand the value of seeking financial advice,” Ms Darnbrough said.
“Many Australians wrongly believe that they have to be middle aged, asset-rich, and be on a large income to warrant using a financial adviser, but this is simply not the case,” she added.
“The reality is a financial adviser will work with you at any age and at any stage of your life and help you create a plan.”
If the FOFA reforms are not passed, particularly in relation to opt-in and the catch-all provision of the Best Interest’s Duty, then the cost of financial advice will only increase – further putting it out of the reach of ordinary Australians.
If the FOFA laws remain as is, as it appears they will, then competition from non-aligned advisers will virtually disappear with expected massive increases in PI cover and administration costs.
It’s ironic that the FSR legislation all those years ago was designed to increase competition and the number of non-aligned advisers in the marketplace but FOFA will do the complete opposite.
By the end of this debacle the only businesses that will be able to remain profitable will be the major banks and their vertically aligned dealer groups (who will be working from much narrower APLs).
People on low incomes and/or young age can’t afford financial advice from a qualified adviser unless part of that cost is absorbed by the adviser or funded by a product. That is the fact. Just filling out a client data form alone based on an hourly rate would price most the public out of the market.