Cost remains the top barrier to advice, and Australians considering getting advice are only willing to pay $800 to help start a retirement income stream, according to research from Investment Trends.
According to the Investment Trends 2023 Financial Advice Report, while regulation has driven up the cost of advice, unadvised Australians would only pay $800 for advice.
The research found there are 1.3 million Australians still looking to see an adviser in the next two years, but only 3 per cent of them would be willing to pay more than $2000 in advice fees.
But potential adviser clients would pay $800 to help start a retirement income stream, compared to $580 for all unadvised Australians (including those who are uninterested in advice).
Potential advised clients would also be willing to pay $800 for advice covering assistance on purchasing an investment property.
The research found the pool of Australians with unmet advice needs remained substantial at 11.8 million, slightly down from the 12.4 million in the 2022 report. High costs (41 per cent) and unclear costs (30 per cent) were the main barriers to entry.
But the research also noted that 80 per cent of unadvised Australians saw the benefits in receiving advice.
“They don’t use advice, not because they don’t see the benefit, but it’s mostly because of the cost,” Investment Trends associate research director Ludovic Sevestre tells Professional Planner.
The top areas consumers would like to receive advice on, but aren’t getting it, are investment strategy (31 per cent), longevity risk (27 per cent) and growing superannuation (24 per cent).
While affordability and accessibility of advice were the key themes of the Quality of Advice Review, and red tape reduction opening the door to lower-cost advice, the research found almost four million Australians are more open to digital advice solutions where the cost of advice is significantly lower than a human adviser.
Investment Trends estimated 750,000 potential advised clients (58 per cent of the 1.3 million) would pay around $320 to use digital advice tools.
The most common specific features of digital advice providers already used are budget planners (54 per cent), retirement needs projectors (46 per cent) and super contribution calculators (46 per cent).
“While digital advice is important, they’re still willing to use a human adviser,” Sevestre says adding only 2 per cent of potential adviser clients would be ‘very likely’ to implement digital advice without human validation.
For the 9.1 million Australians who have unmet advice needs but don’t want to see an adviser, 38 per cent would still turn to digital advice tools when seeking advice, essentially equating to 3.3 million Australians that could see their advice needs fulfilled.
The research found that tax deductibility of advice fees will drastically impact the willingness of consumers to pursue seeing an adviser, with 75 per cent of unadvised Australians willing to in that circumstance, increasing to 85 per cent among potential advice clients.
