More Aussies want advice but cost remains an impediment

The COVID-19 pandemic has prompted many Australians to seek financial advice earlier but the cost of advice is till acting as an impediment.

That is the bottom line of the latest Investment Trends Financial Advice Report which has highlighted just how many Australians believe they want advice and are open to using a financial adviser if only they could afford one.

However, many of those people see the cost of advice as being out of their reach and are turning to their superannuation funds.

According to the report 61% of respondents have suggested they have unmet advice needs with an estimated 3.2 million individuals now open to using a financial adviser within the next 2 years.

It said that over the past decade, the number of Australians relying on professional financial advice has fallen significantly.

“Presently, an estimated 1.8 million use financial advice but this figure has declined at a rate of 100,000 per year since 2020,” it said. “Perceived high costs and lack of investible funds remain the main barriers to seeking financial advice among those who have unmet advice needs.”

Commenting on the report findings, Investment Trends associate research director, Kurt Mayell said the pandemic had prompted many to consider their financial situation and many Australians are now looking to expedite their decision to seek or consider advice options.

“Over the next 2 years, there is likely to be significant demand for advice in areas such as tax reduction strategies, capital preservation, and ESG investing,” he said.

“Positively, the last year has seen an increase in the proportion of advised clients who believe their financial position has improved due to the efforts of their financial adviser, with the average portfolio of advised clients growing by $140,000.”

“This outcome has led to increased client satisfaction for their financial adviser and super fund representative across all 18 key service elements measured. Still, advisers are increasingly required to play the role of educator and financial coach across a growing range of financial products.”

“Loyalty has also increased among advised clients, with 75% of advised clients intending to continue their existing adviser relationship, up from 62% in 2020. Honesty and integrity are key considerations that new advised clients look for when selecting an adviser by a significant margin, followed by independence,” Myell said.

“When it comes to super, Australians with unmet advice needs increasingly say they would turn to their super fund for advice, with roughly 1.5 million members approaching their super fund representative for advice over the last 12 months alone.”

Advice relating to additional super contributions and changing investment options were the most common inquiries. The top barriers holding back members from seeking advice from their fund are unclear costs and a lack of awareness about what advice topics that members have access.”