There’s been a lot of talk lately about how to define and measure the impact of financial advice – what’s ‘good’ and what’s ‘best’?
Recently the FPA, in conjunction with MYMAVINS, conducted a new research study asking Australian consumers directly how they value financial advice. The research also supports a new index – the Value of Advice (VoA) Index. In the future, it will provide a year-on-year comparison as to how Australians are perceiving financial advice.
The new VoA Index compares perceptions of unadvised and advised Australians, measuring their quality of life, financial confidence and satisfaction. In compiling the research, the survey divided respondents into two groups – those who receive financial advice and those who don’t – and asked them questions about their perceptions of advice and how it helps them achieve their lifestyle goals.
For the thousands of Australians who already see a financial planner, the value of financial advice is clear. They know that financial advice can not only help them reduce their financial stress and pursue the lifestyle they desire, but also that financial advice delivers benefits beyond the purely financial. The findings of recent FPA research pointing to the value of advice won’t be a surprise to them.
But the news that financial advice provides many non-financial benefits, and that those who receive financial advice believe it is worth the cost, should provide food for thought for the many unadvised Australians.
It’s an important goal for the FPA to educate more Australians on the true value of financial advice, including the non-financial benefits of greater confidence and improved general wellbeing, peace of mind, better health, and a more social lifestyle.
Added value
Value in financial advice can be found in areas that are not commonly recognised as unmet financial needs, especially for those who currently don’t receive advice from a financial planner.
To provide a like-for-like comparison, the survey asked advised Australians about the greatest financial needs their planner had helped them address, while the unadvised group was asked what they considered their greatest unmet financial needs to be.
Perhaps unsurprisingly, there was common ground in both the advised and unadvised groups. The top three unmet needs of unadvised Australians were among the financial needs the advised group believed their financial planner helped them with most.
Specifically, these client needs were: their ability to live their desired lifestyle; reducing their financial worries and stress, and giving them a realistic plan to achieve a more comfortable retirement.
Interestingly, however, unadvised Australians might not realise a financial planner could:
- Help them avoid financial pitfalls
- Help them get the most out of their financial situation
- Give them greater confidence in making big financial decisions
- Help them define and achieve their goals
- Save them time and hassle planning and managing financial affairs
- Provide them with a good sounding board for making financial decisions
How can financial planners win over unadvised Australians?
The research also identified some clear opportunities to educate Australians about the value of advice, including the younger pre-retiree cohort that many financial planners often dismiss.
It found unadvised Australians under 65 years are more likely to expect benefits from financial advice, including wellbeing benefits. They are also more open to seeking limited-scope financial advice than their older counterparts.
Unadvised Australians 65 and older are more likely to rate their own ability highly and tend to have more of an “I can do it myself” mentality.
Top 5 triggers preventing people from seeking advice
| Under 65 | 65 and over | |
| I feel I couldn’t afford it | 31% | 22% |
| Felt too expensive for the value provided | 30% | 27% |
| I didn’t feel my circumstances justified the need | 26% | 37% |
| I preferred to just do it myself | 25% | 41% |
| Felt I could manage my own financial affairs | 24% | 33% |
Overwhelmingly, the biggest barrier to seeking advice for all Australians is cost.
Those under 65 tend to look at the outright costs while those 65 and over simply tend to feel they can do it themselves.
Finding ways to lower the input costs of providing advice, without compromising on quality, is a critical focus for our profession right now. And this latest research makes it clear this is vitally important for consumers too.
