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Consumers place little faith in finance industry

Consumers place little faith in financial advice industry

Consumer trust in the financial advice industry remains low, with more people turning to digital self-help advice tools than in previous years, a recent industry report reveals.

Consumers remain distrustful of the financial advice industry and are increasingly relying on digital self-help advice tools for information and guidance, the latest analysis from research firm Investment Trends has revealed.

According to the “2019 Direct Client Report”, consumer confidence in financial planners and banks remains low, with the average Australian giving the financial advice industry a rating of 4.8 out of 10, the same rating given in 2018.

“While confidence in the financial advice industry is low, Australians are optimistic that changes are underway,” Investment Trends senior analyst King Loong Choi said.

“The vast majority (76 per cent) expect the regulatory changes proposed by the royal commission will bring about positive and tangible improvements for the industry, most often expecting more severe penalties for adviser malpractice, greater fee transparency and improved professionalism.”

The report, based on a survey conducted in July of 4501 non-advised Australians, also revealed 54 per cent of those surveyed were turning to digital self-help advice tools for guidance in making superannuation, insurance and investment decisions.

“The demand for digital self-help advice tools reflects Australians’ growing range of unmet advice needs, which centre around strategic advice, buying property and post-retirement issues,” Choi said.

“While there is healthy appetite for online advice tools, converting interest into actual usage will require these tools to satisfy a core set of demands.

“Non-advised Australians strongly prefer tools that blend digital engagement with human assistance, with the younger cohort being most open to receiving human support when using online tools.”

The survey showed an increased demand for consolidated reporting tools as well, with 46 per cent of non-advised Australians showing interest in tools allowing users to view all their financial accounts in one place, compared to 41 per cent of non-advised Australians a year ago.

“Appetite for these solutions is strongest among younger Australians, contrary to the general belief that wealthier, older individuals are more interested in whole-of-portfolio reporting functionality,” Choi said.

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