A new report has found a growing demand for financial advice despite trust in the profession at record lows due to the Hayne royal commission.
The 2018 Financial Advice Report from Investment Trends found that an estimated 2.1 million adults intend to turn to a financial planner for advice, up from 1.6 million in 2017.
However, trust levels in banks and financial planners fell severely over that same period. On a scale of 0 to 10, banks fell from a trust rating of 5.5 to 4.8, while financial planners fell from 5.1 to 4.8.
Investment Trends senior analyst King Loong Choi said the trust impact of the royal commission is real, and the advice industry must take proactive measures to rebuild trust among the wider population.
“One of the most important steps involves lifting transparency in every single aspect of the advice process,” Mr Choi said.
Further, the report found that while the majority of Australians who use a financial planner are satisfied with the service they receive, they are now much less willing to recommend it.
It noted that within the context of the royal commission, the satisfaction levels of Australians who use a financial planner only fell from 81 per cent to 74 per cent.
However, the willingness of those same Australian to recommend their financial planner fell into negative territory, according to Investment Trends’ Net Promoter Score.
On the client front, Mr Choi said the top barriers to seeking advice involve not having the time to find an adviser, perceptions of high fees and perceptions of insufficient wealth.
Therefore, he said it’s vital that advisers demonstrate the value of advice to potential clients in the context of their time and money.
“Potential clients must be convinced they need financial advice now, not later in life, and that the fees justify the service,” Mr Choi said.
“Raising Australians’ understanding of the value of advice is vital since many Australians only seek and receive advice when they approach retirement, when in reality they need advice earlier in the accumulation phase.”
The Investment Trends report was based on a survey of 7,639 Australian adults conducted in September 2018.
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