While the demand for advice from financial planners is at a record high, the number of Australians using them has dropped by 25 per cent to 2.2 million active clients in just 10 years – down from three million in 2007.
These were two of the key findings coming from the 2017 Investment Trends Financial Advice Report.
But, in a positive move, the report also found that three million Australians intend to turn to a financial planner for advice in the next two years – up from 2.6 million in 2016, and double the number recorded in 2013.
“A growing number of individuals with unmet advice needs is fuelling growth in demand for financial advice,” said Investment Trends senior analyst, King Loong Choi. “Right now, half of Australian adults say there are areas where they would like to be receiving financial advice but currently aren’t, and this proportion has been on the rise since 2014.”
According to Choi, the top unmet advice needs of everyday Australians centre around retirement planning and budgeting.
However, despite these potential opportunities for planners to service the unmet advice needs of consumers, the research also revealed that client retention remains a key issue, with planners typically losing three clients for every two they gain.
But planners have pro-actively taken steps to address client retention by servicing their existing clients better. Client satisfaction levels have improved to an all-time high in 2017, with 55 per cent of planner clients rating their overall satisfaction with their planner as ‘very satisfied’, up from 45 per cent in 2016.
“Keeping clients well informed on their progress towards achieving their goals is key to enhancing perceptions of value and, in turn, improving client retention further,” said Choi.
Another key finding of the report was the substantial difference between the amount that Australians are willing to pay for advice ($750 on average) and planners’ estimated cost of delivering advice ($2,500 on average).
“Planners themselves, and the providers that support them, play a key role in bridging this advice cost gap,” said Choi. “The majority of potential planner clients are open to a range of cost-saving options, ranging from filling in an online fact-find prior to initial consultation to non face-to-face review meetings.
“In fact, over nine in 10 potential planner clients are open to conducting review meetings with someone other than their planner, if it meant a reduction in fees.”
In its tenth year, the findings of the 2017 Investment Trends Financial Advice Report is based on a survey of 9,552 Australian adults, conducted in July 2017.