Key findings of the Investment Trends 2015 Direct Client Report:

• Australians understand the benefits of financial advice, but many do not intend to turn to a financial planner for help

• 3 million Australians intend to conduct a financial activity without the help of an adviser in the next two years

• Robo-advice has the potential to become a fundamental tool for engaging people with their finances, but providers need to look beyond entry level advice to fully realise this potential

The inaugural Investment Trends Direct Client Report is an in-depth study of Australian adults’ appetite for self-service financial activities. The study is based on a survey of 10,367 Australian adults concluded in late 2015. This study highlights a number of interesting trends:

Australians understand the benefits of financial advice, but many do not intend to turn to a financial planner for help

The number of Australians actively using a financial planner sits at a substantial 2.4 million and a further 1.1 million intend to start using one in the next two years. This leaves 14.5 million Australian adults who are unadvised, the majority of whom will need and want assistance with their investment decisions.

“Financial planners are an important and effective channel in helping Australians with their finances, and many people recognise the benefits of using one,” said Recep Peker, Investment Trends Head of Research for Wealth Management. “However, financial institutions need to look beyond the financial planning channel to engage the rest of the population with their finances.”

Non-advised Australians recognise they need help on financial matters. 86% have concerns about their finances and 36% say they have unmet financial advice needs, even though they would not consider turning to a financial planner for this.

“Non-advised adults collectively hold 70% of the total wealth in circulation, so it’s vital that banks and super funds develop an effective direct channel proposition to meet their customers’ and members’ needs comprehensively,” said Peker.

4.3 million Australians intend to conduct a financial activity without the help of an adviser in the next two years

There are 4.3 million non-advised adults who intend to conduct a financial activity themselves in the next two years, such as beginning to invest, purchasing life insurance, making changes to their superannuation and sorting out their finances for retirement.

While these non-advised adults want to conduct a financial activity directly, most have questions they need answered before they go through the process of conducting each activity.

“Financial institutions seeking to holistically service their clients need to help and guide them through their financial decision making process by addressing the gaping information needs,” said Peker. “Banks and super funds must have a strong digital presence to capture these relationships, as the majority will turn to online sources for guidance.”

Robo-advice has the potential to become a fundamental tool for engaging people with their finances, but providers need to look beyond entry level advice to fully realise this potential

Self-directed online financial tools and calculators have an important role to play in engaging Australians with their finances, with over half saying they are interested in using such tools. This includes 1.5 million people who say they would use robo-advice tools that recommend a set of investments to invest in and 2.6 million who would consider using tools that give a detailed recommendation on how to achieve their financial goals.

Providers have the opportunity to use these tools at all stages of the process to engage non-advised adults with their finances, including triggering the desire to conduct a financial activity, addressing questions they may have, and influencing which products and providers they select.

“Robo-advice tools can be a cost-effective method for banks and super funds to engage those who are not actively considering a financial planner or cannot afford one,” said Peker. “Most current generation robo advisers are focused on investment selection, but these tools have the opportunity to really flourish by helping Australians with more than just their investment selection.”

“Competition is likely to be intense in this space. While banks have an advantage, 36% of people prefer their super fund to provide these tools,” said Peker. “This competition will be an important factor in driving the development of world-class solutions that meet Australians’ comprehensive requirements.”

About Investment Trends        

Investment Trends is the leading specialist market research organisation in the Australian retail wealth management industry, and also operates in the US, UK, Germany, France, Spain, Hong Kong and Singapore. We provide new insights and decision support information to over 200 leading financial services businesses. We combine analytical rigour and strategic thinking with the most advanced research and statistical techniques to help our clients gain competitive advantage.

Investment Trends’ clients include all of the top five Australian banks, the top ten investment platform providers, the top five online brokers, as well as industry regulators, leading margin lenders, dealer groups, financial planning software providers and product providers.

About the report

The results are drawn from the inaugural Investment Trends August 2015 Direct Client Report. This report is based on a survey of 10,367 Australian adults concluded at the end of 2015.

Source: Investment Trends

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