Advice in high demand, but just 6% of Australians willing to pay market value

Adviser Ratings’ Q1 2025 Musical Chairs Report has revealed that advisers need to charge an average of between $3,000 and $4,000 per client annually just to remain viable and cover the mounting costs, however only 6 per cent of Australians say they are prepared to pay current market rates for professional financial advice.

While the government’s recent legislative efforts are intended to make advice more affordable for consumers, the report said advisers are facing mandatory annual costs – including licensing services, professional indemnity (PI) insurance and ASIC and CSLR levies – ranging from around $37,000 up to $84,000.

However, as the high cost of living continues to put pressure on household funds, only a third (33 per cent) of Australians say they will pay more than $500 annually for professional advice.

Adding salt to the wound, the report found that, despite all of this, two-thirds (68 per cent) recognise the value of advice. At the same time, advisers have noted a 36 per cent increase in leads, highlighting growing consumer interest.

“This stark disconnect reveals the fundamental paradox facing the industry: advice has never been more needed, yet it has never been more challenging to deliver affordably,” the report said.

Beyond the basic financial benefits that come from accessing a financial adviser, Adviser Ratings explained that areas experiencing higher adviser attrition rates experience approximately 8.8 per cent more fraud incidents, leading them to dub advisers “unsung guardians”.

As technology has evolved, recent years have seen advisers pushed to introduce more digital capabilities and tools to help Australians access advice more easily and at a lower cost. However, the report found that the uptake on these tools is lagging behind expectation.

This trend, Adviser Ratings said, becomes more apparent with age, with those over 65, who are arguably the most in need of advice as they enter retirement, expressing digital comfort levels below 10 per cent.

On top of this, as AI becomes thoroughly embedded into so much everyday technology, clients are looking for digital tools that “enhance rather than replace human advice”.

Even so, Australians are not necessarily opposed to AI in advice, with 38 per cent of consumers expressing positive sentiments regarding the technology’s use in the field and nearly a third (31 per cent) believing that the key value of AI is in helping financial advisers work more effectively.

To meet the growing demand for digital tools, Adviser Ratings said successful firms are developing hybrid service models that balance both the human and technology aspects of delivery depending on the client’s needs and preferences.

These firms, the report explained, are employing technology as an “amplifier” in the business, utilising it to deliver education and streamline processes to improve efficiency without sacrificing the personalised service aspect.

“The profession’s ability to bridge the accessibility gap while navigating regulatory transitions will determine whether financial advice remains a privilege for the few or becomes available to the many who need it,” the report said.

With technology supposedly going to pave the way for more affordable advice, the Financial Planning Standards Board (FPSB) released a report that found Australian advisers are jumping on the AI bandwagon in droves, with 82 per cent of advisers utilising the technology in their business in some capacity or plan to do so over the next 12 months.

Notably, this is significantly higher than global findings that show just two-thirds (64 per cent) of advisers share this intention.