Despite Australians indicating they are willing to pay more to engage an adviser, affordability remains a key challenge for the financial advice industry.
This is according to a new report from research house Investment Trends.
Based on an online survey of 5,733 adults, the report found that consumers have indicated they are prepared to pay A$770 (US$311) on average for limited advice, up 28% from previously.
But advisers estimate it costs A$2,070 on average to provide advice, the report said. The findings suggest advice affordability continues to be the main hurdle to seeking advice.
“We are seeing unmet advice needs across many financial topics depending on demographics,” Investment Trends Research Director Dougal Guild said.
“Younger generations need support deciding where and how to invest their money, buying a home, as well as managing their cash flow, whilst older generations are focused on retirement considerations and aged care.”
In relation to insurance advice for life/income/wealth protection, Australians are willing to pay a maximum A$644 on average. More than 20% of potential clients say an adviser must be able to provide life insurance advice.
Among active adviser clients, about 12% would like commissions to be paid by the insurer to the adviser and 38% say they would prefer to agree a fee with the adviser and for the amount to be paid by the insurer from the premiums.
The 2022 Financial Advice report says 91% of Australians have concerns about their finances, with 58% listing inflation as front of mind compared with 42% last year.
It also found the advice gap is widest among younger adults with 81% of Australians aged between 18-34 years old indicating they have unmet advice needs, and only 18% have sought financial advice in the last 12 months.
“This younger cohort has fewer complex needs and are willing to pay significantly less for advice than the cost to provide it,” the report said.
“Many are open to digital advice as a solution, providing an opportunity to rethink delivery for this generation.”
In other key findings, a growing number are considering stopping using or switching advisers, citing unhelpfulness (31%), unclear fees (27%), and slow response (28%).
More than four in five clients want advisers to proactively support them throughout the advice journey and online portals have proven to be an effective means to demonstrate progress and keep clients engaged with the advice they are receiving.
“Advisers must sharpen their focus on key areas to shore up client loyalty and client acquisition,” Mr Guild said. “Understanding loyalty drivers is key to both curtail client attrition and maximise client acquisition,” reported InsuranceNews.com.au.