Research confirms value of advice

Financial planning delivers a definable benefit to consumers, according to new research released today by the Investment and Financial Services Association (IFSA).

The IFSA-sponsored KPMG Econotech research revealed that the provision of financial advice can deliver a person as much as an additional $2,457 a year.

According to the chief executive of IFSA, John Brogden, the research highlights the value of advice not just to individuals but also to Australia as a whole because of its capacity to reduce the nation’s foreign borrowing requirement.

He said that if an extra 5 per cent of Australians received financial advice, the implications for the Australian economy within five years would be substantial, resulting in savings as a proportion of gross domestic product (GDP) increasing 0.5 per cent, foreign liabilities of GDP falling approximately 1.5 per cent and GDP itself rising 0.6 per cent.

In releasing the data, IFSA renewed its argument for the provision of financial advice to be tax deductible.

“Given the clear value and importance of financial advice, any reforms must ensure affordable access to financial advice for those Australians who most need it, particularly low income earners and young people,” it said.

“One way to improve access to financial advice is to make all financial planning fees tax deductible in much the same way fees for services associated with purchasing and owning an investment property are tax deductible,” IFSA said.