New research has confirmed most Australian consumers are not prepared to pay big dollars for financial advice, with most believing it should cost just $300 upfront.
That is the bottom line of new research released by Investment Trends this week, which found that the average Australian adult believed the $300 figure was appropriate.
The research was contained in the Investment Trends 2010 Planner Business Model report, which drew on a survey of investors conducted in December last year and a survey of financial planners completed this month.
According to Investment Trends analyst Recep Peker, the preliminary results revealed that, on average, investors believed financial advice should cost $300 for the first visit and $300 for subsequent visits.
“Yet the average financial planner estimates that the break-even cost of providing full advice was $2,700 and providing simple advice was $1,200,” he said.
The research found that, similarly, planners estimated that, on average, the cost of maintaining a client file, including periodic reviews, was $1,400 a year.
Commenting on the results, Peker said it had revealed a striking disconnect between the expectations of planners and their clients.
“It also suggests that many investors may be unaware of the true cost of advice under existing asset-based fee models,” he said.
However, the research also revealed that while consumers might baulk at paying more than $300 for their first visit to a planner, they were typically willing to pay more to have their strategies reviewed.
“Generally, investors seem willing to pay more once they have had firsthand experience with financial planners,” Peker said.
