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High cost, distrust of financial advisers and difficulty engaging with the industry are among the barriers preventing consumers from obtaining financial advice, new research has found.
The Australian Securities and Investments Commission (ASIC) conducted research on consumer perception of financial advice, dividing survey participants into four groups: people who received financial advice in the past 12 months (Group A); people who intended to get financial advice in the next 12 months (Group B); people who had considered getting financial advice in the past 12 months but had not gone ahead (Group C); and people who did not fall into any of the aforementioned groups.
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According to ASIC’s Report 627, Financial advice: What consumers really think, the most commonly cited reason for not seeking advice was the perception that financial advice is too expensive, with 35 per cent of all participants (excluding Group A) citing it as a barrier.
This was followed by participants saying their financial circumstances are too small, followed by 26 per cent saying they like to manage their finances themselves and 19 per cent who say they don’t trust financial advisers.
Another key finding from ASIC was that not getting around to seeking advice was a major barrier for 24 per cent of Group B and 38 per cent of Group C.
“Barriers to getting financial advice included cost, distrust of financial advisers and difficulty of engaging with the industry,” ASIC said.
“These three barriers did not operate independently – rather, distrust of financial advisers influenced consumer perceptions of the cost of advice and how difficult it is to engage with the industry.
“Other barriers included disengagement, feeling vulnerable at the thought of seeing a financial adviser, not wanting to make lifestyle changes, and perceptions of financial advice as being risky or ‘only for wealthy people’.”
What consumers look for in an adviser
The ASIC report found that the top three attributes that online survey participants said they looked for or would look for when selecting a financial adviser were experience, reputation and the ability to talk to customers in a way they can understand.
“Participants acknowledged the difficulties that they had faced or would face when assessing the quality of a financial adviser and identified a range of factors they thought were important,” ASIC said.
“For example, many participants did not feel equipped to judge the expertise of a financial adviser and instead relied heavily on factors that could be easily observed, such as the interpersonal skills of the adviser.”
The next most-cited attributes cited by participants included the ability to take the time to understanding them and their goals, the adviser providing their advice at a low cost and their qualifications.
Curiously, only 13 per cent of Group A participants considered low cost to be important when looking for an adviser.
What consumers want financial advice on
The most common topics that survey participants said they had either received, or were interested in receiving financial advice on, were investments (e.g. shares, managed funds), retirement income planning and growing their superannuation, according to ASIC.
This was closely followed by budgeting or cash flow management, aged care planning and risk protection.
“Participants in the group discussions and interviews identified a range of benefits to getting financial advice, such as achieving their financial goals and improving their financial knowledge,” ASIC said.
[Related: Complainants ‘very unclear’ about broker duties: AFCA]
