Unadvised Australians held back by cost and trust
Advised Australians are twice as likely to be happy with their financial situations than unadvised consumers, according to Generation Life.
The firm’s report Not Tomorrow’s Problem questioned over 1,000 Australians across four demographics of “aspiring”, “mid-life high net parents”, “pre-retirees” and “high net worth legacy builders”.
It found two in three advised Australians were happy with their financial situation, and those who saw an adviser were twice as likely to be happy than those who did not do so.
As for what was holding back unadvised Australians from seeking advice, Generation Life flagged two reasons.
Just under a third of unadvised Australians said they had not sought advice as they could not justify the cost, while 22 per cent said they struggled to find an adviser they could trust, in part caused by the Hayne royal commission.
Research by KPMG found a key risk for financial services firms in Australia is conveying trustworthiness to clients, and that they are acting in the best interest of clients and the broader financial system.
“Stakeholders – from government officials to customers to employees – expect more and more from financial services firms, and the task of rebuilding trust following the 2019 royal commission is arguably still underway.”
However, research by the Financial Advice Association Australia (FAAA) of 1,200 consumers over 25 found 94 per cent of advised clients trusted their adviser to act in their best interest. It also identified trustworthiness as one of the most important attributes of an adviser, alongside expertise and personalised advice considering financial goals.
Generation Life wrote: “The importance of showing trustworthiness throughout the client acquisition and management journey stays crucial as this is still top of mind for many.
“The value of trust and authenticity in advice relationships is high, particularly among younger cohorts. Authenticity is seen as being as important as competency in building trust with a financial adviser among an increasingly large proportion of the population. Financial advisers must be seen to not only be technically sound, but also have the interests of the client at heart.”
Regarding cost, according to Investment Trends, the average ongoing fee charged per client by advice practices stands at $5,500 per annum, up from $4,700 last year.
To counter this, Generation Life recommended advisers demonstrate both the direct growth value from advice as well as the savings derived from having an optimised tax and superannuation strategy.
AUTHOR
Laura Dew
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