Welcome to our new series where we sit down with the minds behind our latest reports for an in-depth look at the key findings and big shifts discovered. In this edition, we’re focusing on our 2023 Financial Advice Report. Stay with us as we unpack what these insights mean for both advisers and their clients. Joining us is Ludovic Sevestre, Associate Research Director at Investment Trends. Welcome, Ludovic!
Ludovic, can you give us an overview of what the 2023 report found about the current state of the financial advice industry?
Absolutely. Findings from the 2023 report revealed significant gaps in advice, indicating that many consumers who need advice aren't getting it. The report highlights the advice opportunity remains whole, with debt management and aged care as growing gaps.
What are some reasons behind this advice gap?
Our research shows the pool of Australians with unmet advice needs remains substantial (11.8m in 2023). Despite the recognised benefits and willingness to invest in advice, cost barriers persist, with many citing high or unclear advice costs, discouraging people from seeking professional help.
Do you have an indication on how much consumers would be willing to pay for advice?
We do. When asking unadvised individuals how much they would pay to receive help with each one of their unmet advice needs, on an average basis, the purchase of an investment property is the single topic people are willing to pay the most to receive assistance ($800). Noting that potential adviser clients would pay a lot more for help to start a retirement income stream ($800, compared to $580 for all unadvised with needs).
Looking to those Australian’s who have engaged with an adviser in the last 12 months, are you able to share how they are receiving advice and how this corresponds to their financial outcomes?
We estimate 1.9m Australian adults have used a financial adviser in the 12 months to October 2023, steady compared to a year ago. Below is snapshot that captures the age and average super fund balance of Australians who started using a financial adviser for the very first time in the past 12 months.
2023 Copyright Investment Trends: 2023 Financial Advice Report. Reproduction prohibited.
Interesting. And what about the advisers themselves? Can you share some of the challenges they have been facing?
Advisers are dealing with increased regulatory pressures and rising business costs, which can impact their ability to serve more clients effectively. Despite these challenges, there's a positive outlook among advisers, with many leveraging technology to streamline operations and enhance their service offerings.
Speaking of technology, how is it shaping the future of financial advice?
Technology is playing a pivotal role in bridging the advice gap. Tools like robo-advisers and online platforms are making financial advice more accessible and affordable. Moreover, these technologies allow advisors to focus on more complex cases and build deeper relationships with their clients.
Exciting times ahead. In conclusion, what does the report suggest for the future of the financial advice industry?
The report is optimistic about the industry's potential to evolve and meet the growing demand for financial advice. It emphasises the importance of innovation, both in service delivery and in addressing the regulatory landscape, to ensure that more Australians can benefit from professional financial guidance.
Thank you, Ludovic for those insights. It's clear that the financial advice industry is at a critical juncture, with opportunities for growth and improvement to meet the needs of Australians better. If you’d like more information on these insights or access to the full report, please get in touch with Allison Macfarlane on a.macfarlane@investmenttrends.com.
