Investment Trends’ latest annual Financial Advice report found that Aussies have significantly stepped up the amount they are willing to pay to plug their advice gaps.
Namely, there has been a 28 per cent increase this year to $770 on average for limited advice, but this is still a far cry from advisers’ estimate of the cost to produce that advice of $2,070 on average, Investment Trends noted.
The report highlighted that the advice gap is widest among younger adults with 81 per cent of Australians aged between 18 to 34 years old indicating they have unmet advice needs, and only 18 per cent have sought financial advice in the last 12 months.
This younger cohort has fewer complex needs and is willing to pay significantly less for advice than the cost to provide it, the research found. In fact, many are open to digital advice as a solution, providing an opportunity to rethink delivery for this generation.
“We are seeing 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, as well as managing their cash flow whilst older generations are focused on retirement considerations and aged care,” said Dougal Guild, research director at Investment Trends.
Investment Trends found that as many as two in three Australians are open to using a digital advice tool to plug advice gaps, although most would prefer to use it in conjunction with some form of human interaction.
“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,” Mr Guild said.
“A sizeable portion of members are also unaware of intra-fund advice solutions available as part of their memberships, presenting an opportunity for education.”
The research further revealed that newly advised client numbers have outpaced client attrition for the first time in three years and while this is increasing, Investment Trends indicated that a growing number are considering stopping using or switching advisers, citing unhelpfulness (31 per cent), unclear fees (27 per cent), and slow to respond (28 per cent).
“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 Mr Guild.
I think it will be more a case the market will need to meet the pricing rather than the pricing meeting the market. The reality the FP are not interested in doing work for 200-300. Just like a lawyer and an accountant everybody should have one in general terms but most people won’t pay the money required. That is the work of professional services and the government will just have to come to terms with over time.