Consumers only want to pay $800 for advice

Mike Taylor

Managing Editor and Publisher

8 March 2024

Australians are prepared to commit to paying an average of $800 for financial advice, according to the latest research from Investment Trends.

The finding, within the Investment Trends 2023 Financial Advice Report, has underlined the degree to which consumers are being deterred from accessing financial advice based on cost.

According to Investment Trends, 1.3 million people with advice needs plan to seek an adviser over the next two years and close to four million Australians are open to low-cost digital advice if the right conditions are met.

According to the research analysis, the barriers to people seeking advice are proving difficult to abate with most people citing the high or unclear cost of advice as barriers to entry.

“In contrast, the value of advice is well perceived with more than 80% of unadvised Australians seeing benefits in receiving financial advice. Australians who engage with an adviser state they feel significantly more confident in their overall financial wellbeing (61% agree) – demonstrating the meaningful impact advice can deliver to people who are able to access,” Investment Trends Head of Research, Dr Irene Guiamatsia said.

The analysis said that when analysing the profile of potential adviser clients – the 1.3 million with unmet advice needs who plan to seek an adviser in the next two years – is very similar to that of the 9.1 million with needs who don’t plan to seek the help of a professional adviser.

When asking unadvised individuals how much they would pay to receive help with each one of their unmet advice needs, on an average basis, the purchase of an investment property is the single topic people are willing to pay the most to receive assistance ($800). Noting that potential adviser clients would pay a lot more for help to start a retirement income stream ($800, compared to $580 for all unadvised with needs).

“These findings further highlight the necessity to address the cost barrier, three in four unadvised with needs state tax-deductible advice fees would be a likely incentive to seek advice – increasing to 85% among potential adviser clients,” Guiamatsia said.

Looking to the remaining 9.1m Australians who have unmet advice needs but don’t intend to seek advice in the near future, 38% of those would turn to digital advice tools when seeking advice – equating to another 3.3 million Australians that could see some of their advice gaps fulfilled, if the right digital solution came along.

In terms of specific features in a digital advice offering, the most common types of tools already used by unadvised adults are budget planners (54%), retirement needs projectors (46%) and super contributions calculators (46%) – where all three also received the highest in demand.

“Appetite for digital advice naturally increases as the amount they are willing to pay reduces. We estimate 750,000 potential adviser clients (58%) would use digital tools at a calibrated cost of $320,” concluded Guiamatsia.