More Aussies seek advice: Investment Trends


By Julie May

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The number of active financial planning clients rebounded to 2.5 million in 2014, after declining from 3 million to 2.4 million over the four years to 2013, an Investment Trends report released yesterday showed.

The research group’s “2014 Advice and Limited Advice Report”, based on a survey of 6256 Australians, revealed the demand for advice had spiked on the back of Australians becoming more concerned about their finances, Investment Trends analyst King Loong Choi said.

"In particular, Australians are more worried about the adequacy of their retirement savings, the impact of inflation and managing their cash flow," Loong Choi said.

Meanwhile, clients were rating their planners better overall in 2014 as they felt they were getting more value out of their relationships, which as a consequence was driving an uplift in client referrals.

While 1.9 million Australians said they intended to look for a financial planner within the next two years, up from 1.5 million a year earlier, Loong Choi pointed out figures encompassed those who did not have an existing relationship with an adviser as well as those who wanted a different adviser.

The report also showed cost remained the largest barrier to further growth of the advice market.

“There remains a vast gap between the cost of delivering comprehensive financial advice and what consumers expect advice should cost,” Loong Choi said.

“Advice providers can circumvent this [however] by providing limited advice, and transition these clients to different advice models as their needs develop.”

When cost was taken into account as a factor, only a small proportion of Australians said they would prefer to receive the traditional model of comprehensive advice delivered face to face.

Meanwhile, there were five times as many Australians who said they would prefer to receive limited advice if it was delivered at a lower cost.

The report showed most people were open to transitioning between different advice models, Loong Choi said, which highlighted that while people might initially prefer limited advice, they were not opposed to receiving comprehensive financial advice over time.

"Financial planning businesses need to consider developing a multi-pronged advice delivery approach to both help attract and retain clients," he said.

"Planners have already started to recognise this opportunity, with half saying they intend to provide more limited advice in 2015."

He added the industry was still wrestling with how best to deliver limited advice, and satisfaction with limited advice providers was 11 per cent lower than comprehensive advice delivered by a financial planner.

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