Renewed trust in advice since the Hayne royal commission has led to double the amount of client leads during 2021 compared to the previous year according to research from Vanguard and Adviser Ratings.
Vanguard head of financial services Rachel White tells Professional Planner this is despite an overall decrease in the number of advised consumers.
“When you drill down into where that’s coming from, more than half of those leads come from the over 55-year-olds and [almost] 40 per cent were actually between 35 and 55,” White says.
Data from the Adviser Ratings Australian Financial Advice Landscape report released in April found 100,000 consumers dropped out of advice in 2021.
What has led to the increase in demand, White says, is trust in financial advice has increased since the royal commission.
“Despite the fact that trust fell to around 35 per cent in the wake of the royal commission, that’s now hovering at a new baseline of almost 50 per cent. There definitely appears to be evidence of the benefits that advice can bring and that extends well beyond portfolio construction but also supporting general financial literacy and confidence in markets.”
Gang of youths
White says there is increased demand from younger Australians who would like to better understand and receive help with their finances, but the rising cost of advice has led to many of them feeling priced-out.
“64 per cent of those seeking advice are only able to pay less than $500. It does demonstrate it is a really big gap.”
The report found the median ongoing fee increased by 41 per cent over the last three years, rising from $2,510 to $3,529.
Research from Netwealth found the “emerging affluent” cohort of millennials are the strongest client potential for advisers which has the assets to cover and justify typical advice fees.
The AR/Vanguard report noted higher incomes or asset balances are the defining features of leads across all age groups and lower clients are likely to opt out of even speaking with an adviser.