The level of value consumers place on advice has been laid out in a university study, indicating a disconnect between advisers’ and consumers’ perception.
The study was conducted by University of South Australia (UniSA) and led by Geoff Pacecca, principal adviser at financial planning firm GAP Financial and Professor Chandra Krishnamurti, professor of finance at UniSA.
It surveyed 75 financial advisers and 160 consumers (30% of whom who were advised) on their perceptions of advice in eight areas; investing, superannuation, budgeting, retirement planning, aged pension advice/Centrelink advice, life income protection, aged care and wills.
For the advised consumer, 20% said they found advice extremely valuable and 21.8% found it moderately valuable, rising to 28% for female respondents and falling to 18% for those in a lower socioeconomic group.
For the unadvised consumer, 79% said they did not expect it would be valuable to them, rising to 86% for those in the lower socioeconomic group. Some 33% said they did not trust advisers while financial literacy was also cited as a barrier.
This was then broken down by sector where most value was placed on advice about super or retirement planning while aged care and insurance advice was rated lowest. In the case of super advice, over half ranked it as ‘very’ or ‘extremely valuable’ while only 6% ranked it as ‘not valuable’.
Source: UniSA
Looking at respondents in the lower socioeconomic group, none of them felt that advice on super or wills was ‘not valuable’ at 0% compared to 6% and 8% for the wider consumers.
However, when it came to asking advisers what they believed their clients valued, there was a shift in values.
Areas in which advisers perceived higher rankings than their clients were retirement planning (93% v 54%) and super (85% v 58%) with a particularly stark difference reported in the perception of investment advice at 82% versus 4% by clients. On the flip side, advisers perceived the value of advice about wills and budgeting to be lower than it actually was.
Source: UniSA
The report stated: “Financial advisers’ perceptions of their clients ranking of the value of financial advice differ substantially from the advised consumers’ actual ranking of this advice. Over each of the eight advice areas identified, advisers perceived that their clients ranked the value of six specific areas higher than their clients’ actual ranking and two lower”.
It concluded: “Both advised consumers and financial advisers place a higher value on advice compared to unadvised consumers. It is recommended that a consumer awareness campaign about the value of financial advice be implemented and targeted towards consumers from lower socio-economic groups and females. Policy initiatives or government-funded incentives to improve the access to financial advice for this group would be futile if they do not perceive financial advice to be valuable to them.”
