Advisers miss opportunities by focusing on top end
Financial advisers could be missing out on opportunities, with only one in six consumers obtaining their wealth management products through a financial professional, according to Roy Morgan’s latest Single Source survey.
The results showed that only 16.8 per cent of wealth management product (like superannuation funds) holders obtained their fund from a professional advisor compared to 4.9 per cent for the bottom 20 per cent of the market and 41.9 per cent for the top 20 per cent.
In dollar figures, consumers holding up to $125,000 in wealth management were very unlikely to use a professional adviser to purchase funds, but those that had over $300,000 had the highest use of advisors.
The focus on the top end is to be expected though, with the top quintile accounting for nearly two thirds (63.4 per cent) of the total market value of wealth management, compared to the lowest quintile, which accounts for only 0.7 per cent of market value.
The top two quintiles combined accounted for 85.2 per cent of total funds, and yet made up only 40 per cent of consumers, with the remaining 60 per cent of consumers accounting for only 14.8 per cent of funds.
Norman Morris, industry communications director, Roy Morgan, said the research showed there was obviously a big opportunity for advisers to expand their use.
“Given the complexity of this market and rule changes, professional advice is likely to be necessary for most, particularly as balances grow,” said Morris. “Currently it appears that only when balances approach a few hundred thousand dollars or retirement approaches that advice is sought.”
Morris said advisers faced the challenge of providing advise profitability to low value customers, and getting them more involved in a topic that was probably of little interest to them.
“With the employer generally being the major channel for obtaining wealth management products, due to the dominance of superannuation, it is unlikely that they will have the resources or qualifications to provide comprehensive financial planning advice, this is the role of the professional advisor.”
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