Most Australians still uninterested in advice

12-May-2016

By Sarah Kendell

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The majority of Australians remained uninterested in seeking face-to-face financial advice despite recognising they had issues with their finances, although a significant proportion would consider using robo-advice tools, according to new research from Investment Trends.

The research house’s “Direct Client Report”, based on a survey of over 10,000 Australian adults, revealed about 80 per cent did not use a financial planner, and were uninterested in engaging one, compared to around 13 per cent who used a financial planner and 7 per cent who did not currently use an adviser but planned to engage one within the next 12 months.

Of those who did not use an adviser, 86 per cent had concerns about their finances, while 36 per cent said they had unmet advice needs, indicating a potential knowledge gap when it came to the value of financial planning in addressing those issues.

The research also revealed significant enthusiasm toward robo-advice, with an estimated 1.5 million people prepared to use simple robo-advice tools that provided a model portfolio to suit the investor’s needs, while 2.6 million were interested in using more complex robo-tools that gave detailed advice recommendations.

Investment Trends head of research for wealth management Recep Peker said the findings of the report provided important insights for financial institutions about where the future of advice was heading and how they could better engage potential clients.

“Robo-advice tools can be a cost-effective method for banks and super funds to engage those who are not actively considering a financial planner or cannot afford one,” Peker said.

“Most current generation robo-tools are focused on investment selection, but these tools have the opportunity to really flourish by helping Australians with more than just their investment selection.”

He added that although those investors wanted to conduct most of their financial advice transactions online, they would still need help along the way through direct contact with an adviser.

“Financial institutions seeking to holistically service their clients need to help and guide them through their financial decision process by addressing gaping information needs,” he said.

While banks might have greater day-to-day engagement with their customers, many respondents indicated super funds were their preferred financial institution through which to seek advice, he said.

“Competition is likely to be intense in this space – while banks have an advantage, 36 per cent of people prefer their super fund to provide these [advice] tools,” he said.

“Competition will be an important factor in driving the development of world-class solutions that meet Australians’ comprehensive requirements.”

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