Planner demand up, client retention down

Demand for financial advice is at record highs yet, paradoxically, planners are losing two clients for every one they secure, according to new research from Investment Trend

The ‘Investment Trends 2017 Financial Advice Report’ reveals an industry at a turning-point – recognising the growing demand for good advice but struggling to come to terms with how to retain them over the long-term.

The Investment Trends research estimates that three million Australians intend to turn to a financial planner for advice in the next two years, up from 2.6 million in 2016, and double the number observed in 2013.

Disturbingly, there remains a large gap between what clients believe they should pay ($750 on average) and the $2,500 planners say it costs them to deliver sound advice.

Commenting on the findings, Investment Trends senior analyst, King Loong Choi said a growing number of individuals with unmet advice needs were fuelling growth in demand for financial advice particularly around retirement planning and budgeting.

He said that in these circumstances, significant opportunities existed for planners and advice providers that could effectively meet the client needs.

However Choi said that despite the growing demand for advice, the financial planning industry had been unsuccessful in arresting the decline in client numbers over the past decade with client numbers well down on where they were a decade ago.

“There are currently 2.2 million active planners clients nationwide, down 25 per cent from three million in 2007.

“Client retention remains a key issue, with planners typically losing three clients for every two they gain,” said Choi.

However he pointed out that, more positively, financial planners had taken steps to address client retention by servicing their existing clients better, with client satisfaction levels improving to an all-time high in 2017, with 55 per cent of planner clients rating their overall satisfaction with their planner as ‘very satisfied’, up significantly from 45 per cent in 2016.

“Keeping clients well informed on their progress towards achieving their goals is key to enhancing perceptions of value and, in turn, improving client retention further,” Choi said.