ASIC's new report, Financial advice: What consumers really think (REP 627) drills down into what Australians think about financial advice - and why they are (or aren't) getting it.
Based on a survey of 2,545 participants - weighted to "ensure that it was representative of the Australian population" - the report aims to understand the particulars of people's relationships with financial advice, including what they'd want to pay for it and why they haven't gotten around to it as yet.
Commenting on the research, ASIC commissioner Danielle Press said: "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."
Reflecting this, 35% of respondents said the main barrier to getting financial advice was that it was "too expensive". A further 29% said their financial circumstances were "too limited for it to be worth getting financial advice."
Issues of cost aside, though, the report shed light on a more concerning issue: 49% of respondents agreed that "financial advisers were more interested in making themselves rich than in helping their customers." Another 37% believed "financial advisers did not generally have the customer’s best interests at heart."
According to ASIC, "many" participants exhibited wariness or distrust towards the advice industry; common descriptors included "fraudsters," "rogues," or "slick".
Overall, just 14% of respondents said they trusted financial advisers "a great deal". 33% trusted advisers "a moderate amount," while a nearly half (49%) said they trusted advisers "a little" or "not at all".
Obviously, this paints a bleak picture about how advisers are perceived in the community, but there is hope. Despite all of the above, 41% said they intended to get financial advice in the future; 25% intended to do so within the next 12 months.
When it came to choosing a financial adviser, many respondents were motivated by personal recommendations; they were more likely to assume a financial adviser had expertise "if that adviser had been personally recommended to them by a family member, friend or colleague."
Respondents also said that 5-10 years of experience in the industry was a "good indication of expertise," although they also expressed a preference for advisers who matched them in their "life stage". As a result, older respondents "thought that younger financial advisers may lack the necessary life experience to provide advice that was relevant to them."
Overall, Press said the report presents "good news" for the industry, arguing that the introduction of reforms like FoFA has had a positive effect on the way consumers see advice.
You can read the full report here.
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