According to the Goldman Sachs Asset Management 2013 Australian Retail Investor Survey – which surveyed more than 600 investors in October 2013 released today – the number of investors “relying” on the recommendation of an external financial adviser or broker has dropped since 2012.
While 41 per cent of investors indicated they do have a financial adviser, only 10 per cent indicated they are reliant on the advice provided by that individual when making investment decisions – a statistic described by GSAM as “alarmingly low”.
The number is down from 17 per cent in 2012, which GSAM managing director and head of third party distribution Asia-Pacific Jessica Jones said was already alarming.
However, Ms Jones also said that while the results are “concerning” that the end is not nigh for financial advice.
“There is a real need and opportunity for advisers to engage with retail investors to help them better understand risk and diversification,” she said.
Ms Jones said GSAM still sees significant opportunity for advisers to provide an educative role on asset allocation and portfolio construction, and is investing in adviser education through its Wealth Management Institute.
Factors including increasing government regulation – which has “forced advisers to consolidate and potentially lose clients” – as well as post-GFC negative sentiment towards finance professionals may have contributed to the drop in reliance levels.
James (#10) Come back and tell us how well you did after the next GFC bcs that’s what separates the advisers from the boys 🙂
James. Good on you for having the skills to manage your own funds effectively. But just because you can, that doesnt mean the same for everyone else, like you implied in your first comment. I taught myself to play a musical instrument without lessons…should I just assume everyone else can do that too and we do away with music teachers?
I’ve seen client’s act against our advice and lose 90% of their portfolio value chasing unrealistic returns on stocks they overheard people talking about in the locker room. Some people do need our advice and guidance.
I see this as a positive. No one should blindly follow advice, they should understand the advice being provided and decide for themselves whether to take it or not.
This is an indication of the maturing of the market and should be seen as a positive.
MARK(5)..you know, full well, I would be breaking the law if I were to advise family and friends so I DO NOT.I relied on an adviser for some years but came to the conclusion he was costing me more than he was worth. I’ve done much better on my own and my profit/risk balance is as good as his ever was.Other than the normal rise and fall of the market I’ve never lost a cent due to a bad decision
The strenuous efforts if the industry to apparently successfully communicate to the potenti client base that secret and undisclosed commissions have a significant impact on the credibility of the advice. Plus the poor handling of the industry to again apparently try its best to avoid any clear and unambiguous requirement to work solely in the interest if the client have had a far wider impact than the industry appears to realise
As a result of the poor communications in the fight against Fofa these are the messages that have stuck
Goldman Sachs could with value have assessed these aspects of possible causes of the reported low take up of Advice
After all
Caveat Emptor!
Are these results that surprising given that the previous federal government spent its entire time in office bringing those evil financial planners into line? Using the villification of refugees as a starting point, I’m suprised we are not simply referred to as “illegals”.
I don’t manage my clients money. That is the role of the fund manager more often than not. I manage my clients behavior. When fear and greed cause panic I have to be there to restore calm and ensure he or she doesn’t do something they will regret later, such as locking in a loss, or chasing the market when it overheats or cancelling vital cover before checking to see that their health is still good.
James, congratulations to you, to be able to educate yourself and have the time to manage your fund. If one of your relatives or a friend seeked advice, would you be prepared to provide the right advice and/or assistance to them?
Well, that is what I do and my colleague, Edward, in the his comment do day in day out. I also would be interested in how you have judged your performance Vs that of adviser’s generally. All of our clients are assisted as individuals based on their stated needs and concerns as to risk of their capital.
Depending on the exactly how the question was asked in the survey, this may actually be excellent news. If 41% of those surveyed are using an adviser and only 10% are relying on the advisers advice, then three quarters of those already receiving advice understand the final investment decisions are theirs, as are the consequences and outcomes.
Of the other 59%, at least James is heroic enough to accept all responsibility for his actions in good times and presumably bad, and should be commended for so boldly forsaking the wisdom an experienced adviser may be able to add. After all, it is everybody’s right to learn one mistake at a time.
James, what you and most other retail/SMSF investors don’t see are the high number of people who turn their nest egg into a scrambled egg, these results are not published but I hear and see the horror stories every week!
Hey Guys you are missing the point. The reason we are not using advisers is because we make better decisions ourselves,and it costs nothing.It may be “disturbing or concerning” for Advisers but not for investors…look at SMSF performance results.If you were better than me I’d use you.
And who did not see this coming?