Clients of
financial planners are significantly better off and save more than people who
are not clients, new analysis has found. The
analysis, commissioned by the Investment and Financial Services Association of
Australia (IFSA) and conducted by KPMG Econtech, has found that financial
planners have a very strong positive influence on individuals’ savings habits
and patterns. People who are clients of financial planners save, on
average, about $2500 a year more than people who are not clients.

In addition,
the analysis has found that people who are clients of a financial planner have,
on average, savings and investment account balances more than $8000 greater
than people who are not clients.

And it has
found that eight out of nine planning networks surveyed for the analysis “exceeded
regulatory requirements for training and development”, while six of the nine “exceeded
the regulatory requirement for consumer protection”.

Other respondents
met, but did not exceed, regulatory requirements.  

The analysis
has found that even a modest increase in the number of people receiving financial
planning advice could lead to a very significant boost in national savings, it
has found. It says that if just five percent more people sought financial
planning advice, national savings would increase by 0.5 per cent of gross
domestic product (GD) by 2015-15.

The analysis
stresses that it is “focused
on the impact of financial advice on savings behaviour, not valuing the advice
received by financial advisors”.

“If analysis was to be undertaken to
value the financial advice received from financial advisors, the analysis would
need to consider the rates of returns, associated risks, and the fees associated
with the financial advice,” it says.

The Financial Planning Association
of Australia (FPA) has itself attempted to quantify the value of advice, by assessing
the financial impact of advice on a series of specific scenarios.

But the IFSA/KPMG analysis is the
first to place a broader economic value on the services provided by the
planning industry.

In addition to the affect on
individuals’ financial positions, and the boost to national saving, the
IFSA/KPMG report also assesses the impact of financial planning services on
reducing reliance on foreign debt.

It says a boost to national savings
of 0.5 per cent as a result of more Australians receiving financial advice
“leads to a long-term reduction in foreign liabilities by 1.5 per cent of GDP”
compared to what would otherwise be the case.

The IFSA/KPMG report is based on an
analysis of nine so-called “IFSA FANs” – financial advice networks (FANs) that
hold both an Australian Financial Services License and IFSA membership.

The IFSA FANs represent about 5600
individual planners, and supplied data on more than 840,000 individual
accounts.

For a full copy of the IFSA/KPMG
report, click
here

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