The number of consumers engaging with financial advice has fallen by 25 per cent over the past decade, despite new research from Investment Trends showing that demand for advice has doubled over the past four years.
The research group released its Financial Advice Report 2017, which explains that there are currently 2.2 million active advice clients across Australia, which is a 25 per cent decrease from 3 million in 2017. This figure also represents a decline in the long-held figure that 20 per cent of Australians seek advice, with the new figures being closer to 12 to 15 per cent.
King Loong Choi, Investment Trends senior analyst, said advisers were on average losing three clients for every two they gained, conversely, satisfaction levels with advice had reached an historical high. According to Investment Trends, roughly 55 per cent of advice clients rate their overall satisfaction as very satisfied, a number which is up from 45 per cent in 2016.
Choi said the demand for advice would continue to grow over the next two years and ‘half of Australian adults say there are areas where they would like to be receiving financial advice but currently aren’t, and this proportion has been on the rise since 2014.’
The research was conducted by Investment Trends, which estimated that three million Australians intend to seek financial advice from professional adviser in the next two years.
Choi said, ‘A growing number of individuals with unmet advice needs is fueling growth in demand for financial advice, the top unmet advice needs of everyday Australians centre around retirement planning and budgeting.’
Investment Trends found that, despite this demand, the gap between what consumers are willing to pay for advice was $750, compared to $2,500 that advisers estimate as the cost of delivering advice.
Choi said options were available to advisers and licensees to close this cost gap and ‘the majority of potential planner clients are open to a range of cost-saving options, ranging from filling in an online fact-find prior to initial consultation to non-face-to-face review meetings. In fact, over nine in ten potential financial advice clients are open to conducting review meetings with someone other than their planner if it meant a reduction in fees.'
The Investment Trends Financial Advice Report surveyed 9,552 people in July 2017.