New ASIC consumer research released today reveals the barriers faced by consumers when considering financial advice.
ASIC’s Report 627, Financial advice: What consumers really think (REP 627) presents independent research into consumer experiences of, and attitudes towards, financial advice and the advice industry. The research focused on the overall use of financial advisers, motivators and barriers to seeking personal advice and consumer attitudes towards the financial advice industry.
‘While Australians believe financial advisers can offer significant expertise on financial matters, our research shows that many don’t seek advice because they are put off by factors such as high costs, significant distrust of the industry and a perception that financial advice is only for the wealthy,’ ASIC Commissioner Danielle Press said.
According to the research, while 41 per cent of Australians intend to get personal financial advice in the future, many of them will not proceed because of these perceived barriers.
The research found that 27 per cent of Australians had received financial advice in the past, and 12 per cent of Australians received advice in the past 12 months. The research also highlighted that a significant majority of consumers sought financial advice because they felt advisers had expertise in financial matters and could recommend products that they, as consumers, could not normally find on their own.
‘The good news for industry is that consumers who had recently received financial advice had more positive attitudes towards financial advisers than those who had not. Moreover, even limited knowledge of industry reforms such as FOFA (Future of Financial Advice) appears to have improved consumer attitudes towards the sector. So, it is even more important for industry to get on board with the reforms.
‘Although not all Australians need financial advice, it is imperative that people wanting advice when making critical financial decisions are able to access high quality advice and equally, feel confident that the advice is in their best interests,’ Ms Press said.
The research found that consumers generally seek financial advice for investments such as shares and managed funds, retirement income planning, growing their superannuation and budgeting or cash flow management. Interestingly, it highlighted that use of digital advice (also known as robo-advice) is still very low (one per cent). However, 19 per cent of research participants said they were open to getting digital advice once it was explained to them.
‘Financial advisers have an important role to play in helping consumers improve their financial position, and there is a real opportunity for the advice industry to rebuild that trust by reorienting itself and putting consumers at the heart of its services,’ Ms Press concluded.
Report 627 highlights findings from quantitative and qualitative research commissioned by ASIC and undertaken by independent market research agency, Whereto Research. The quantitative research involved an online survey of 2,545 participants, which was weighted to ensure that it was representative of the Australian population.