Trust in financial planners not the issue


By Kristen Crawford

Email Article Print Article

Related Articles: | |

A lack of trust in the financial planning industry is not the major barrier to consumers seeking advice, a new report has shown.

Practice consulting firm BusinessBlades compiled the opinions of 4000 consumers, revealing one of the major obstacles to seeking out a financial planner was consumer confusion about what a financial planner actually did.

BusinessBlades founder and co-director Neil O’Grady said the report, which was the result of a nationwide survey, revealed 33 per cent of people were opting to look after their financial affairs themselves.

“A further 27 per cent claimed to have thought they didn’t have enough money to invest to make visiting a financial planner worthwhile and 22 per cent said they would only seek financial advice following a specific event like a redundancy payout or inheritance,” O’Grady said.

Interestingly, and in contrary to widespread industry belief, only 9 per cent of respondents said a lack of trust was the key reason for not seeking the services of a financial adviser.

Further, the report made some alarming trends apparent, with only 5 per cent of participants claiming they would go to a financial planner to establish goals and develop a plan to achieve them. It also showed only 2 per cent would seek advice for personal insurances and 12 per cent would seek investment advice with a planner.

“These statistics make it apparent that consumers haven’t grasped the scope nor understand the benefits of services offered by financial planners,” O’Grady said.

He suggested the industry needed to move towards greater value propositions and potentially provide more singular rather than holistic advice.

That was important in order to remedy the gap in consumer engagement and access the untapped portion of the advice market, which comprised 80 per cent of the population, he said.

“The process of repositioning advice businesses doesn’t have to be painful. It may be just a slight tweaking or modification that helps provide real clarity to consumers about who the financial planner is, what a financial planner does and how they can help,” he said.

Despite O’Grady’s concerns, William Buck and Chartered Accounting wealth advisory director Chris Kennedy said he felt the major barrier to average Australians seeking out a financial adviser was in fact cost.

Kennedy said advice was becoming more and more expensive and was the real hurdle to Australians accessing advice, particularly on the back of the Future of Financial Advice (FOFA) reforms.

“One of the things that FOFA was designed to do was make sure the ‘little guy’ would have access to advice, but what it has actually done to a degree is cut them out because the burden of the legislation has pushed up adviser costs,” he said.

« Back to Articles