Confusion about what a financial planner actually does appears to be the main barrier to seeking financial advice, according to Connecting with Consumers, a new report published by financial services practice development consultants, BusinessBlades.
Neil O’Grady, Founder and Co-Director of BusinessBlades says the report, which was the result of a nationwide survey canvassing the opinions of 4,000 consumers, revealed that people are opting to look after their financial affairs themselves. “It usually takes a life event, such as receiving an inheritance or redundancy payout, to prompt them into approaching a financial planner,” he says.
One third (33%) of those surveyed chose to look after their own finances, a further 27% said they thought they didn’t have enough money to invest to make visiting a financial planner worthwhile and 22% said they would only seek financial advice following a specific event.
“Interestingly, only 9% of respondents said lack of trust was the key reason for not seeking the services of a financial planner,” Mr O’Grady says.
One of the most alarming trends apparent from the research, according to Mr O’Grady, was that only 5% of respondents said they would go to a financial planner to establish goals and develop a plan to achieve these goals. “Even more alarming is that only 2% said they would go to a financial planner for personal insurances and only 12% would seek investment advice from a financial planner.”
Mr O’Grady says these statistics make it apparent that consumers haven’t grasped the scope of services offered by financial planners and don’t understand the benefits of seeking financial advice. “Financial planners need to look at their value propositions differently,” Mr O’Grady says. “As an industry, we have to look at how people perceive what we do. We have to do more work on the scope of services offered and the benefits people are going to get out of using them. We have been talking about value propositions for years; now is the time to take action.”
Mr O’Grady says the research also revealed that consumers want singular, rather than holistic advice. “Consumers want advice which is specific to an identified need, such as retirement or coming into inheritance,” he says. “If you want to engage with the 80% of Australians who aren’t currently using a financial planner, talking up holistic advice is not going to win them over.”
Mr O’Grady suggests advice practices and institutions may need to look at how they can offer single-issue advice. “It may be about developing a series of life-stages packages that help clients meet the specific needs of each life stage,” he says. “The process of repositioning advice businesses doesn’t have to be painful. It may be just a slight tweaking or modification that helps provide real clarity to consumers about who the financial planner is, what a financial planner does and how they can help.”
Download a copy of the Connecting with Consumers research report.
