New research has revealed that advisers should be looking outside of the pre-retirement demographic for prospective clients, with trust a key barrier to engaging more younger consumers.
Netwealth’s The Advisable Australian Report surveyed approximately 1,000 consumers, around 600 of whom already had an advice relationship, and 400 of which had either never seen or previously seen an adviser.
The report used survey responses and ABS population statistics to calculate that there were around 2.1 million Australians likely to seek advice in the future, and 2.18 million who would possibly seek advice.
Of those in the ‘likely’ group, 40 per cent said they would seek advice in the next 12 months, while 28 per cent said they would see an adviser in the next three years.
Those who were the most likely to seek advice soon were generally in the mid-life rather than pre-retirement demographic, with 40 per cent of the ‘likely’ group saying they were actively working towards paying off a mortgage and 27 per cent saying they wanted to buy a home.
This compared with around 17 per cent who said they were likely to seek advice, and were saving for retirement as their primary goal.
The report also revealed that prospective advice customers generally had a moderate level of financial literacy already, compared to those less likely to seek advice who were either extremely confident with money or knew nothing about finance.
Of those who said they were likely to seek advice, almost 50 per cent said they were reasonably confident in making financial decisions, while about 45 per cent of those unlikely to seek advice said they were very or extremely confident making decisions.
Around 10 per cent of the ‘unlikely’ group said they were not confident making financial decisions, while none of the ‘likely group’ had this response.
Two key barriers to seeking advice appeared to be knowing who to talk to and who to trust, with 53 per cent of those likely to see advice saying they would probably start an advice relationship sooner if they knew where to start. A further 51 per cent of those likely to seek advice said they would definitely start an advice relationship sooner if they found someone they could trust.
The trust issue was of particular significance for Generations X and Y, with 69 per cent of Generation X and 71 per cent of Generation Y respondents who were likely to seek advice saying they would start an advice relationship sooner if they knew who to trust.
Affordability was not as big a factor with this group, with just 29 per cent of the ‘likely’ group saying they would definitely start a relationship with an adviser if it was more affordable.
The report suggested advisers needed to establish themselves as a source of trustworthy information with these consumers in order to convert them as clients.
“Individuals in this group have certain wealth needs driven by life events and believe they are ready for financial advice. As such they will not need as much convincing that advice is valuable,” the report said.
“Rather these people are not sure where to start or whom to turn to. [Advisers] will need to foster trust by proving their credentials and showing examples of experience with other clients in their shoes, with similar financial goals and aspirations.”
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