An evolving advice landscape by 2050
Research has forecast how the advice landscape demographics could look by 2050, including how many more individuals will need complex advice.
A report by NMG Consulting for the Financial Services Council (FSC) found the number of Australians with complex advice needs will grow by 70 per cent, from 4.3 million people to 7.2 million in 2050.
This growth is driven by factors including:
- Ageing population.
- Increased superannuation balances.
- Higher percentage of population with mortgages at retirement.
- Higher percentage of population working beyond retirement age.
- Greater generational wealth transfer.
Currently, the demographic with the greatest need for complicated advice is those aged 55–64 at 14 per cent, and this is expected to grow by 42 per cent, to 20 per cent in 2050. This can include advice regarding income sources, breadth of wealth assets, debt, dependents and business ownership.
This is followed by those aged 45–54 where their need for complex advice increased by 30 per cent, from 13 per cent to 17 per cent.
Complexity level is determined by 18 metrics, including family situation, living arrangements, employment status, household salary and wealth, NMG said.
The greatest proportion needing simple advice currently is those aged 35–44 (56 per cent) and 75+ (53 per cent). In 2050, this need will shift towards the older demographics, with 65 per cent of those 75+ needing simple advice, a rise of 22 per cent; and 60 per cent of those aged 65–74, a 17 per cent rise from 51 per cent in 2023.
There is no forecast change recorded in the 18+ and 25–34 age groups.
Percentage of population with simple and complicated advice needs in 2023 and 2050
| Simple advice needs 2023 | Simple advice needs 2050 | Complicated advice needs 2023 | Complicated advice needs 2050 | |
| 35-44 |
56 |
56 | 7 | 8 |
| 45-54 | 49 | 46 | 13 | 17 |
| 55-64 | 47 | 46 | 14 | 20 |
| 65-74 | 51 | 60 | 10 | 10 |
| 75+ | 53 | 65 | 2 | 3 |
Source: FSC/NMG Consulting, August 2024
The report said: “As households become more financially complex, they have higher advice needs, and notwithstanding higher financial literacy and higher engagement, they are more likely to seek advice from a financial planner to manage their advice needs.
“There is a clear correlation between having multiple advice needs and the propensity to seek ongoing support from a financial planner. This is notwithstanding the fact that those who have higher advice needs also have higher financial literacy and engagement with their finances/wealth.”
Last month, a report from Iress and Deloitte found surveyed advisers said they expect their customer base to increase by 27 per cent on average over the next five years, bringing on 486,000 new customers from factors such as the rising retirement population and intergenerational wealth transfer.
“This sits against a backdrop of rising competition in the industry – for example, from superannuation funds or robo-advice platforms, which means advisers must act now to avoid their competitors from capturing future growth in the market. Yet, sustainable growth will require them to adapt their business models.”
AUTHOR
Laura Dew
Recommended for you
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
Estimates for the calendar year 2024 put the advice industry on track for a loss in adviser numbers as exits offset gains from new entrants.
Adviser Ratings shares five ways that financial advice changed in 2024 with an optimistic outlook for 2025, thanks to the Delivering Better Financial Outcomes legislation.
National advice firm Invest Blue has announced several acquisitions, including the purchase of an estate planning and wealth protection business Lambert Group.
