A new industry report has found while the banking royal commission has well and truly dented consumer confidence and trust, high net worth individuals (HNWI) still see the benefit of financial advice.
The Investment Trends “2018 Financial Advice Report” found satisfaction levels fell from 81 per cent last year to 74 per cent this year, with two-thirds of Australians indicating they are aware of the inquiry and a quarter of those keeping a close eye on the proceedings.
In addition, the willingness of these same Australians to recommend their financial planner, as measured by the Net Promoter Score, fell precipitously into negative territory, the report said.
Nevertheless, the growing demand for advice remains, with an estimated 2.1 million adults intending to turn to a financial planner in the next two years, up from 1.6 million in 2017.
“A lot of the findings is echoed across HNWI clients,” Investment Trends senior analyst King Loong Choi told selfmanagedsuper.
“Average trust levels, from a scale of zero to 10, fell most severely for banks – 5.2, down from 5.8 in 2017 – and financial planners – 4.5, down from 5.4 in 2017 – but compared to other wealth segments, HNWI clients are still amongst the most trusting of banks.
“And despite this, there remains a significant demand for advice – 54 per cent still say they have advice needs, with longevity protection, investment strategy and retirement planning being the top needs.”
Choi said for this group of clients, their top barriers to seeking advice include having a preference to look for advice as and when they need it, adviser fees, a preference to manage their own financial affairs and, lastly, a lack of trust.
He therefore highlighted the importance of planners demonstrating the value of financial advice to potential clients in the context of their time and money.
“Potential clients must be convinced they need financial advice now, not later in life, and that the fees justify the service,” he said.
“Raising Australians’ understanding of the value of advice is vital since many Australians only seek and receive advice when they approach retirement, when in reality they need advice earlier in the accumulation phase.”
The report was based on a survey of 7639 Australian adults and was conducted in September.
A high portion of HNWIs surveyed – 69 per cent – have an SMSF.