Who seeks financial advice and why?
A recent report by ASIC (Australian Securities & Investments Commission) has shed some light on what consumers think of financial advice and of the advisors who deliver it.
The report explored the use of financial consultants, and attitudes towards them. Results reveal that people who have already sought advice, or intend to, are more likely to be better engaged with, and more confident about. the role of financial advice and advisors.
As a Financial Advisor in Perth, we know that financial advice appears to be at the forefront of many Australians’ minds. While 27% of Australians had received financial consultations at some point in the past, 12% had received financial advice in the last 12 months and a total of 41% of Australian citizens intend to get financial advice in the future.
So what does someone who has recently received financial advice look like? This group generally enjoy relatively affluent levels of household income, and are more likely to be university educated than the national average. According to the survey, they are also likely to be nearing retirement age, and have set long-term financial security for their lives post-work.
The most popular area for Australians seeking financial advice was investments, with 45% of respondents citing this topic. This was followed by retirement income planning, at 37%, and then growing superannuation at 31%. The areas Australians were less likely to seek advice in were budgeting or cash flow management at 22%, and finally, aged care planning at 18%.
The reasons Australians used financial consultations were varied. Top of the list was to access the specialised financial expertise that advisers have, with 79% quoting this motivation. 75% agreed that financial advisers could recommend products participants could not find themselves. Respondents also agreed that it’s the role of a financial adviser to read the fine print and notify their client of important matters (74%).
The survey revealed the attributes participants looked for when choosing a financial consultants. The top three were level of experience, coming in at 41%, reputation at 38%, and the ability to talk to customers in a way they can understand at 36%.
Another key finding was that people who had recently been on the receiving end of financial advice were more favourable towards financial advisors, and even having basic knowledge of recent changes in the financial landscape gave people a more positive outlook on financial advice and advisors.
The survey categorised Australians into three groups.
Group A was made up of consumers who had received financial advice during the previous 12 months. Compared to the average Australian, they were more likely to have household incomes in excess of $100,000 per year and be university-educated. They tended to be in the 55-74 age bracket. 82% of this group said that planning their financial future made them feel secure, and they showed confidence in their financial decision-making.
People who intended to get financial advice in the near future made up Group B. There were more females in this group, generally in the 35-54 year old age group. 37% of this group said they had sought financial advice in the last year, and they were more likely than all Australians to be proactive in managing their household finances. While they felt their knowledge was limited, they intended to develop it long-term.
The final group – Group C – represented people who had recently intended to get financial advice but had not yet gone ahead and done so. These participants on the whole represented the age group of 18 to 34 years, and tended to work full-time. This cross-section appeared to be less engaged with financial issues and to be less confident in making decisions regarding money. In fact, their attitudes appeared to be representative of the average Australian.
In summary, the more aware Australians are of financial reforms and the more eager they are to receive advice, the more positively they are likely to be towards the role and the importance of the financial advice industry. While this is something of a self-fulfilling prophesy, it’s good to know that a little knowledge and openness to seeking expert advice can go a long way to planning a secure financial future.