The high cost of receiving financial advice continues to be a barrier preventing half of retirees from seeking an adviser’s support.
Vanguard’s latest How Australia Retires report, which surveyed more than 1,800 respondents, has underscored the unaffordability of advice in Australia as an ongoing hurdle.
“The cost of delivering advice for many advisers has increased over recent years, in part due to increased compliance obligations which has in turn reduced accessibility,” the study wrote.
Over half of Australians surveyed did not opt for advisers as a source of information and guidance when making retirement decisions.
The majority (51 per cent) cited cost as an obstacle to seeking advice. Other barriers included not thinking they need advice (27 per cent), lack of trust in advisers (20 per cent), and not knowing how to find a good adviser (15 per cent).
Research from Adviser Ratings last year discovered that financial advice fees have risen by close to 40 per cent over the last five years. The median fee was at $3,710 in 2023, up from $2,510 in 2018. For some firms, they reported charging as much as $13,000.
Meanwhile, the insights firm recently determined how much advised versus unadvised consumers are willing to spend on advice, with both cohorts citing figures well below the current costs.
The advised cohort stated they were willing to pay $1,791 on average for advice in 2023, slightly up from $1,752 in 2022. For unadvised individuals, they were willing to pay just $651 on average for advice in 2023, a rise from $553 in the previous year.
While Vanguard’s research highlighted cost as a significant barrier, one in five Australians said they would consider consulting with an adviser in the future.
Nearly one-quarter (24 per cent) of those surveyed said they would be open to seeing an adviser in an ongoing relationship, while 25 per cent would prefer a once-off setting.
Daniel Shrimski, managing director of Vanguard Australia, emphasised the value of advice for those approaching retirement.
“Retirement planning can be complex and involves a multitude of competing decisions. Our research shows that Australians who have sought financial advice are more confident about their retirement than those who haven’t, and are also more likely to have a clear retirement plan in place,” he said.
“Importantly, good financial advice is about more than just picking the right investment or earning higher returns. Our research shows that the benefits Australians expect most from advice are actually related to emotional security – they want advice to help them feel confident about preparing for retirement and that they are on track to achieve the lifestyle they envision.”
