Nine out of 10 advised clients believe the benefits of financial advice outweigh the costs, the Value of Advice Index has found.
The index, produced by the Financial Advice Association and presented at a media briefing on Wednesday morning in Sydney, found the benefits of advice included improved personal wellbeing, greater confidence in people’s finances as well as a reduction in both financial and personal worries.
FAAA chair David Sharpe said the research has shown that people with a financial adviser have a higher quality of life than those who do not.
“There are demonstrable benefits, both from a tangible and intangible point of view,” Sharpe said.
“The value of advice index is really clear that seeing a financial adviser has a demonstrable improvement on people’s financial wellbeing, their satisfaction, their confidence in their finances as well.”
The cost of providing financial advice has exploded in the years after the Hayne royal commission as the cost to serve has increased along with a smaller pool of advisers that remain in the industry.
Research from Investment Trends found the average ongoing advice fee was $5500 after the last few years have seen a multi-thousand dollar rise in average fees.
The current Albanese government, through Minister for Financial Services Stephen Jones, has sought to reduce the cost of advice by addressing several red tape measures via the Delivering Better Financial Outcomes legislation, although only part of the reforms have passed into law with just months remaining before the next federal election.
The legislation, designed off the back of the Quality of Advice Review, aimed to improve efficiency for advice businesses by streamlining fee consent requirements and eliminating Statements of Advice in favour of simpler advice records.
However, at a time when financial advice is at its most expensive, existing clients consider it to be worth the money.
Financial advice has considerably improved the confidence of advised clients regarding their finances. The index revealed confidence in finances for clients of certified financial planners (CFPs), which has increased from 61 per cent in 2023 to 75 per cent in 2024. This is significant at a time of financial uncertainty and added stress.
For unadvised Australians, this only increased by 2 per cent from 55 per cent to 57 per cent in one year.
A myth the FAAA wants to dispel via the index is that financial advice is not only for the rich but has tangible benefits for the average Australian.
“What we’re seeing is those who aren’t on super high incomes, that don’t have super high wealth, are still getting benefits,” Sharpe said.
For example, the Value of Advice Index showed the quality of life has improved for clients advised by a CFP from 68 per cent in 2023 to 77 per cent in 2024.
When compared to unadvised Australians where there was a decrease from 63 per cent in 2023 to 62 per cent in 2024, these numbers suggest a clear improvement in quality of life.
Finances are “inextricably linked to people’s personal wellbeing, whether it be their health, their emotional wellbeing, mental stress,” Sharpe said.
The relationship between financial and personal situations is connected regardless of generation. Sharpe explained that the advice is valuable for many generations and not just those approaching retirement.
“Whether it be Gen Y, Gen X, baby boomers, whatever it might be, the value of advice is really, really clear across the generations.”
Sharpe explained the FAAA intends to demonstrate through the findings that getting financial advice is worth the cost because of the recognised value in multiple areas.
The index was based on consumer research conducted between August and September 2024 and involved an online survey of 1193 Australians.
