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Demand for financial advice surges

Despite a string of scandals that have rocked the advice industry, new research by Investment Trends has found client numbers are on the rise.

The 2014 Advice & Limited Advice Report – compiled off the back of a survey of 6,256 Australians – found the number of active adviser clients had grown to an estimated 2.5 million after falling to 2.4 million from 3 million in the four years to 2013.

Commenting on the result, Investment Trends analyst King Loong Choi said clients are rating their advisers more highly in 2014 than in 2013.

“They feel they're getting significantly more value out of their relationships,” Mr Choi said. “This has driven a natural uplift in client referrals.”

The research house also found there is an increasing demand for financial advice, with an estimated 1.9 million Australians wanting to look for a financial adviser within the next two years, up from 1.5 million in 2013.

“The increase in demand for financial advice is partly driven by Australians becoming more concerned about their finances,” Mr Choi said.

“In particular, Australians are more worried about the adequacy of their retirement savings, the impact of inflation, and managing their cash flow."

Investment Trends also found many Australians were deterred from seeking financial advice due to cost, with 30 per cent of respondents in the survey stating “advisers cost too much”.

Mr Choi pointed out that cost is also influencing whether clients seek comprehensive advice or limited advice.

Of the respondents in the survey, only five per cent of Australians would prefer to receive higher cost comprehensive advice while 25 per cent would prefer to receive lower-cost limited advice, Mr Choi explained.