Investment, Insurance, Superannuation
Apex Insights > Your Business > Breaking down the barriers – ASIC research highlights what consumers want from advisers
September 2019
Breaking down the barriers
Many Australians recognise the benefits that come from seeking financial advice, with views on what constitutes “good” advice.
Advisers who can alleviate their concerns are in the best position to build sustainable and trusting relationships.
Some of these concerns can be found in a recent report from the Australian Securities and Investments Commission (ASIC) Financial advice: what consumers really think, which provides a snapshot of key motivators around seeking advice, including attitudes towards advisers.
Reasons for seeking advice (or not)
The report found that 41% of Australians intend to seek financial advice in the future and 25% intend to do so within the next 12 months. One could argue that’s a lot of fertile ground for advisers.
The reasons for seeking advice were varied:
All of these are helpful beliefs that advisers can leverage to engage with clients and inspire action.
But while these reasons are motivating people, there are competing reasons that get in the way of Australians taking action to get that advice.
According to ASIC’s report, 20% of those surveyed said while they had decided to get advice in the past 12 months, they didn’t proceed. The most commonly cited reason (35%) was that advice is too expensive; lack of transparency was another concern, while 19% said they didn’t trust advisers.
So how can these impeding beliefs best be overcome?
Trusting someone with your finances is not easy. Most of us were instructed as children to beware of strangers, and some people believe it’s wrong to talk about how much you earn or the assets you have, so telling a stranger all about your financial situation goes against the grain. Therefore, the more opportunities advisers can create to build familiarity, to demystify advice and to provide no/low-cost and easy-to-understand education that demonstrates value, the greater the chances of successfully overcoming these instilled beliefs.
How people choose advisers
An understanding of what people look for in an adviser is also helpful. The ASIC report found that the level of experience was the most important attribute for 41% of consumers, but an adviser who was able to “talk to me in a way I can understand” was also highly rated with 36% agreeing this was key.
One way advisers can capitalise on the latter is to develop the type of skills where they can better explain financial concepts and strategies. Often, consumers can “tune out” when they don’t understand what is being discussed so using simple explanations and tools to illustrate financial terms is not only a great way to ensure your clients understand what you’re explaining but it also helps them to become more engaged.
Opportunities for advisers
The CEO of the Financial Planning Association of Australia (FPA), Dante De Gori, says ASIC’s findings support the results of the FPA’s Gifts that Give research that found 57 per cent of Australians would like the gift of time with a financial planner, indicating a strong overall positive desire for professional help to create a financial plan.
“We acknowledge that ASIC's research shows barriers to obtaining advice exist, especially around the cost and this is where I feel there is an opportunity for advisers,” he says. “Advisers could be more transparent about what their fees are, why they charge what they do and what value can be expected for those fees. Advice is not just about investment returns; consumers also need help with areas like budgeting and cash-flow management and this is an area where I feel planners undersell their services."
Meanwhile, the Association of Financial Advisers’ general manager of policy and professionalism, Phil Anderson, says a positive point about ASIC's research is it shows that people recognise they need advice. “While 41% say they intend to get it, a challenge for advisers is making sure they do make the call and take it up,” he says. “Unfortunately, there is a continuing lack of understanding of what financial advice is and that can deter people from seeking it.”
Anderson says the research shows the bulk of what consumers want from advisers tends to be product related when there are other offerings that are more “emotional”, such as improving confidence around investing, which is also important. Existing clients understand the significant emotional and behavioural benefits of financial advice.
Providing education to break down barriers
Providing value to consumers – for example, through educational materials to help them better understand key financial concepts so they can make more informed decisions – can help build trust both with the industry and with the individual adviser who offers it.
OnePath Life recently launched “The New Path ” – designed to increase clarity, control and commitment for life insurance customers. The program includes OnePath Clarity – a library of white-label content that advisers can customise and use as part of their education and lead-generation strategies with their clients.
Contact your Business Development Manager for more information.
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