Advice clients ready to switch advisers
Yet more research has been published confirming that cost is the greatest inhibitor to Australians obtaining financial advice.
At the same time, a growing number of financial advice clients have signalled their preparedness to change advisers if they aren’t receiving the service they want.
The latest Investment Trends Financial Advice Report has reinforced the advice affordability issue just weeks out from the Quality of Advice Review (QAR) presenting its final recommendations to the Government.
According to the 2022 report, 91% of Australian adults have concerns about their finances, with rising inflation front of mind (58%, up from 42% in 2021).
It said that advice affordability continues to be the main hurdle to seeking advice albeit that Australians have significantly stepped up the amount they are willing to pay to plug their advice gaps (28% increase this year to $770 on average for limited advice), but still a far cry from advisers’ estimate of the cost to produce that advice ($2,070 on average).
Commenting on the research, Investment Trends Research Director, Dougal Guild said the firm was seeing unmet advice needs across many financial topics depending on demographics.
“Younger generations need support deciding where and how to invest their money, buying a home, as well as managing their cash flow whilst older generations are focused on retirement considerations and aged care,” said Dougal Guild, Research Director at Investment Trends,” he said.
The report highlighted that the advice gap is widest among younger adults with 81% of Australians aged between 18-34 years old indicating they have unmet advice needs, and only 18% have sought financial advice in the last twelve months.
It said this younger cohort has fewer complex needs and willing to pay significantly less for advice than the cost to provide it. Many are open to digital advice as a solution, providing an opportunity to rethink delivery for this generation.
“Two in three Australians are open to using a digital advice tool to plug advice gaps, although most would prefer to use in conjunction with some form of human interaction,” added Guild.
“We may also start to see super funds having a larger role to play in addressing the advice gaps with a large number of members surveyed open to seeking advice from their super fund but many unaware of services available. A sizeable portion of members are also unaware of intra-fund advice solutions available as part of their memberships, presenting an opportunity for education.”
The research further revealed that newly advised client numbers have outpaced client attrition for the first time in three years and while we are seeing this increase, a growing number are considering stopping using or switching advisers, citing unhelpfulness (31%), unclear fees (27%), and slow to respond (28%).
Over four in five clients want advisers to proactively support them throughout the advice journey. Online portals have proven to be an effective means to demonstrate progress and keep clients engaged with the advice they are receiving.
“Advisers must sharpen their focus on key areas to shore up client loyalty and client acquisition. Understanding loyalty drivers is key to both curtail client attrition and maximise client acquisition,” said Guild.
Many advisers are happy to charge $50 a month if it means eliminating Annual Fee renewal Consent forms (that doesn’t exist in an other nation on earth)
“A sizeable portion of members are also unaware of intra-fund advice solutions available as part of their memberships”. Which put another way means… “A sizeable portion of members are unaware they are paying their super fund fees for no service”.