Advice still costs more than consumers want to pay
Australian consumers have signalled they increasingly need good financial advice but while they are prepared to pay more for it than a year ago, the amount they are willing to pay still falls well short of the cost of advice, according to the latest research from Investment Trends.
The research, contained in the Investment Trends Financial Advice Report 2015, reveals that the real cost of advice is still four times more than most consumers indicate they are willing to pay.
According to the Investment Trends analysis, this gap between consumer attitudes and the actual cost of advice provides scope for disruption.
Commenting on the results, Investment Trends senior analyst, King Loong Choi said many consumers understood that receiving financial advice could help improve their financial wellbeing, with most of those who used a planner typically feeling financially better off.
"However, the way advice is currently delivered may not be aligned with how many Australians would prefer this to be delivered," he said.
"This creates an opportunity for advice providers to innovate and develop new advice models that reduce the cost of delivering advice and align fees closer to clients' expectations while retaining margins."
Choi said that when cost was factored in, there were four times as many Australians who would prefer to receive lower-cost scaled advice than higher-cost face-to-face comprehensive advice.
"Furthermore, the digital channel can be leveraged, with two in three Australians open to conducting parts of the advice process online," he said.
The Investment Trends research also suggested that consumers might look first to their superannuation funds for advice, with modelling showing 400,000 members intended to turn to a representative from their super fund for advice in the next two years.
"By raising members' awareness of these advice offerings and helping them overcome their barriers to seeking financial advice, super funds can help members fulfil their advice needs," Choi said.
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