Financial planners charging far more than we want to pay
Australians have a problem with the cost of financial advice.
While they are now willing to pay more for financial advice than they were a year ago, it falls way short of the true cost, says King Loong Choi, a senior analyst at Investment Trends.
Commenting on the findings of the research house's annual financial advice report, Choi says planners typically charge four times the amount Australians are willing to pay.
This is despite their understanding that good advice can improve their financial wellbeing.
Choi says it is an opportunity for the industry to go in a new direction.
Already there has been a big swing to low-cost financial advice. For example, superannuation funds offer advice to members, often free or at a small cost, by using their scale and technology. Intra-fund advice improves member satisfaction and funds' retention levels. Modelling by Investment Trends shows that 400,000 members intend to turn to their super fund for advice in the next two years.
When cost is factored in, says Choi, there are four times as many Australians who would prefer to receive lower-cost scaled advice than higher-cost face-to-face comprehensive advice.
Investment Trends says digital advice can be leveraged, with two in three Australians open to conducting parts of the process online.
Computer-generated or automated advice, known as robo advice, is a key area of focus for the Australian Securities and Investments Commission (ASIC), which has set up a robo advice taskforce.
"ASIC is very supportive of the automated provision of advice," Greg Medcraft, chairman of ASIC, told a recent industry lunch in Sydney.
"We see it has the potential to offer a convenient, low-cost advice service to consumers. We also see benefits such as improved compliance and record keeping, and the potential to reduce conflicts of interest."
If you need financial advice, you're not alone.
Around 8.7 million Australians want help with their finances - that is 200,000 more than in 2014, according to Investment Trends. The increase is partly due to rising prices and not being able to afford extras such as holidays.