Australians are generally better off when they receive financial advice but don’t know it until after they’ve gone through the process.
That is the bottom line of a white paper released by the Association of Financial Advisers (AFA) at its national conference on the Gold Coast with the organisation’s chief executive, Phil Kewin noting that one of the key findings was that, in general, people who received financial advice paid less tax, had little or no bad debt and had their money working hard for them.
But the white paper also pointed to continuing existence of barriers to people obtaining advice including cost and the erosion of trust in the financial planning industry.
The white paper, Great Advice for More Australians, was commissioned by the AFA and undertaken by CoreData based on a survey of 947 people between mid-August and early October, with Kewin claiming it demonstrated that financial advice led to better decisions which led to better financial outcomes.
He said that receiving advice also leads to better financial behaviours with one of the most important findings being that people who received financial advice believed they are more in control of their finances than those who did not.
"Of those surveyed, more than half (50.2 per cent) of those who receive advice believe they could survive financially for more than six months if they were unable to work, whereas only around a quarter (26.2 per cent) of those who did not receive advice said the same thing."
Kewin said the challenge for the advice profession now was to overcome the two barriers to advice.
"The cost of advice is a very real barrier for some people," he said. "Another barrier is the erosion of trust in our industry.”
“That said, it is encouraging that the White Paper reveals 72 per cent of people who have never received financial advice would consider it. As a profession, we need to think about how we can work to overcome these twin challenges and deliver financial advice to a community that clearly has an appetite for it."