How much would unadvised Aussies pay for advice?

11 March 2024
| By Jasmine Siljic |
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Investment Trends has uncovered that unadvised Australians are prepared to pay $570 on average to receive financial advice.

The financial services research firm has released its 2023 Financial Advice Report, which surveyed 5,200 people, to unpack Australians’ current attitudes towards financial advisers.

Investment Trends’ report found that approximately 1.3 million individuals with unmet advice needs plan to seek an adviser in the next two years. This was helped by more than 80 per cent of respondents who said they could see the benefits in receiving advice.

The top three areas consumers would like to receive advice on, but currently are not doing so, include their investment strategy (31 per cent), longevity risk (27 per cent) and growing their superannuation (24 per cent).

On average, this group of unadvised Australians are willing to pay $570 for advice, the report discovered. If they are seeking advice on the purchase of investment property or to start a retirement income, then it would rise to $800.

The latest Adviser Ratings’ Financial Landscape report found the median fee was $3,710 in 2023, up from $2,510 in 2018.

The cost of advice still remains the greatest barrier to seeking advice, with unadvised individuals with unmet advice needs citing high (41 per cent) or unclear (30 per cent) advice costs as barriers to entry.

“These findings further highlight the necessity to address the cost barrier, three in four unadvised with needs state tax-deductible advice fees would be a likely incentive to seek advice – increasing to 85 per cent among potential adviser clients,” commented Irene Guiamatsia, head of research at Investment Trends.

The Australian Taxation Office recently provided updated rules on the tax deductibility of financial advice fees (TD 2023/D4).

The clarified tax determination states that an individual may be entitled to a deduction for fees paid to a financial adviser if they satisfy the requirements in sections 8-1 (general deductions) or 25-5 (tax-related expenses).

Under section 8-1, individuals can access a deduction to the extent that the expense is incurred in gaining or producing assessable income. This includes recurrent fees for an existing or ongoing income-producing investment.

Looking at section 25-5, advice related to managing a client’s tax affairs may also be deductible. However, not all advice provided by an adviser is considered to be tax-related.

The Financial Advice Association of Australia welcomed the “sensible” clarification at the time. In the past, the industry body advocated for full deductibility of advice fees and described it as “one of the quickest and easiest” ways to make financial advice more affordable to Australians.

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