The value of financial advice is well recognised by Australians, but cost still remains as the chief barrier to seeking it, with many claiming the price of advice was too high, according to Investment Trends.
As part of its “2023 Financial Advice Report”, the research firm found consumers wanted advice on investment strategies (31 per cent of those surveyed), longevity risk (27 per cent) and growing their superannuation (24 per cent), but were not receiving it on the basis of how much it cost.
“The barriers to seeking advice are proving difficult to abate with those unadvised and with unmet advice needs most often citing high (41 per cent) or unclear (30 per cent) costs as barriers to entry,” Investment Trends stated, noting there were about 11.8 million people with unmet advice needs in 2023.
Investment Trends head of research Dr Irene Guiamatsia said this view ran counter to the belief advice was beneficial, but also highlighted the need to address its affordability.
“The value of advice is well perceived, with more than 80 per cent of unadvised Australians seeing benefits in receiving financial advice,” Guiamatsia said.
“Australians who engage with an adviser state they feel significantly more confident in their overall financial well-being (61 per cent agree) – demonstrating the meaningful impact advice can deliver to people who are able to access it.”
The online survey of 5202 Australian representative adults conducted between September and October 2023 found unadvised individuals were willing to pay for help with unmet advice needs, with the purchase of an investment property the area for which they would pay the most to receive assistance, but the highest they would pay is $800.
“These findings further highlight the necessity to address the cost barrier as three in four unadvised [people] with needs state tax-deductible advice fees would be a likely incentive to seek advice – increasing to 85 per cent among potential adviser clients,” Guiamatsia said.
Based on its research, Investment Trends stated there were 1.3 million people with unmet advice needs who planned to see an adviser in the next two years and a further 9.1 million with advice needs who do not plan to seek the help of a professional.
Of that latter group, 38 per cent would use digital advice tools to seek advice, with the firm pointing out a further 3.3 million Australians could have some of their advice gaps fulfilled if they find the right digital solution.
“Appetite for digital advice naturally increases as the amount they are willing to pay reduces. We estimate 750,000 potential adviser clients (58 per cent) would use digital tools at a calibrated cost of $320,” Guiamatsia said.
