An industry survey commissioned by IOOF and conducted by Core Data has shown individuals currently receiving financial advice understand it is delivering value and benefits to them that go beyond pure monetary gains.
“The True Value of Advice: A Study of 12,643 Australians” report showed the overwhelming number of advisers’ clients, 88 per cent, are aware of how much they pay for financial advice, the services they receive in return for the fees charged, and the value of the advice exceeds the cost of it.
The study identified elements such as improved mental health, lower levels of stress, and better relationships with family and friends as some of the non-financial benefits financial planning clients enjoyed.
Further it acknowledged people receiving financial advice experience an ‘advice dividend’ being the benefit they get for the investment they make in financial advice. The research also found this ‘advice dividend’ applied to all financial advice recipients regardless of their level of wealth and gender.
“The scale of “The True Value of Advice” research means that for the first time we can say with a high level of confidence that financial advice has value to Australians, regardless of their wealth, age or gender. There’s a measurable and significant ‘advice dividend’ for people who receive financial advice,” CoreData principal and founder Andrew Inwood said.
With reference to unadvised Australians, the report found the majority of them had similar unmet financial advice needs as clients of financial planners had before receiving advice. On a positive note for the industry the research also reflected the specified unmet needs were satisfied once financial advice was provided.
Survey respondents in the unadvised group advice also revealed they would be more likely to seek holistic financial advice if their experience after receiving limited advice was positive.
The report confirmed reasons for not seeking financial advice remain the same as previous industry research has shown with 61 per cent of respondents thinking they did not have enough assets to justify receiving it, another 55 per cent believing it is not the right time to seek advice and a further 54 per cent feeling they cannot afford the service.
The IOOF study did reveal growth opportunities still exist for practitioners with 46 per cent of unadvised individuals indicating they are open to seeking financial advice in the future. Of this group 86 per cent said they would consider getting advice if they had a particular need for it, 72 per cent said they would take this course of action if they could find a trustworthy adviser, 61 per cent said needed a better understanding of the benefits of financial advice before they would consider receiving it, and 51 per cent expressed similar sentiment if they had time to organise it.
“Australian financial services licensees must commit to supporting and helping advisers deliver advice to clients in an efficient way that not only makes advice practice businesses valuable and sustainable, but also helps to remove perceived barriers to seeking advice and makes advice more affordable, more accessible, and more engaging for more Australians,” IOOF chief advice officer Darren Whereat said.
The report processed 11,615 responses from the clients of financial planners and a further 1000 responses from individuals who are not receiving any financial advice.