New research: Consumers hungry for financial advice

New research released today shows that clients of financial advisers are very satisfied and consumers are eager for broad-based financial advice to assist them through all life stages and key events – even moving house.

AC Nielsen was commissioned by ING to survey over 1000 consumers and advisers to better understand consumer perceptions of advice so the industry can better deliver to their expectations.

Results reveal that clients of financial advisers are generally very satisfied with the advice they receive, with 96% rating advisers as honest and trustworthy and 90% saying their adviser understands their financial goals.

Four in five clients of financial planners indicate satisfaction and only 1-in-20 cite dissatisfaction. Furthermore, consumers appear well informed about financial planning with 99% of clients stating they know what advisers provide and how, with just 1% indicating they know very little.

Consumers rated the most important criteria in consulting a financial adviser as ‘honesty and trust’ (97%), ‘understands financial goals’ (91%), and ‘clear explanation of recommended products’ (82%).

“The findings show most people value quality financial advice as the key determinant in securing their financial well-being,” said Paul Bedbrook, CEO of ING Australia.

“It shows that consumers clearly understand the value of professional financial advice and are satisfied with the quality of advice they are receiving.”

The research shows that current and potential clients are hungry for broad-based financial advice that takes account of their whole financial situation and circumstances. Current clients cited their major reasons for consulting their financial adviser as ‘reviewing current investments or plan’ (84%), ‘developing a comprehensive financial plan’ (71%),’helping to save and invest for retirement (70%), and ‘recommending the most tax efficient ways to invest’ (65%).

Interestingly, potential clients cited key life event reasons for seeking financial advice as ‘moved house’ (26%) and ‘moved jobs’ (19%),

“This clearly shows that people are hungry for advice relating to all aspects of their financial situation and life goals, including how to maximize their savings and investments, purchase a home and save for their children’s education,” said Mr Bedbrook.

 “Life events such as moving house or jobs are becoming just as important reasons for seeking financial advice as being retrenched or nearing retirement. This radically challenges the prevailing view that most people only need to see a financial adviser when nearing retirement.

“Advisers are very well positioned to meet this emerging demand for what could be called ‘advice for life’.”

78% of consumers believe it is a priority for advisers to ‘clearly outline the service’ they are paying for and 77% believe it is very important for advisers to provide ‘clear fees for the service provided’. Only 36% of consumers believe it is very important ‘that the financial adviser has low fees’.

“The research shows that the key issue for consumers regarding adviser remuneration is not so much what they are paying or how they pay it, but what they are getting for it,” said Mr Bedbrook.

The research also shows that consumers believe that the legally required Statements Of Advice provide clear, tangible evidence of the advice being provided and the money being charged.

71% of consumers generally agreed that ‘the SOA shows how a financial adviser is remunerated’ and only 6% disagreed, 72% believed the ‘SOA was easy to understand’ and only 5% disagreed, and 71% felt ‘the SOA provides clients with all the information they need’, with only 3% disagreeing.

“This indicates that the comprehensive FSR regulatory reform which the government and industry has invested so much in, is working for clients,” Mr Bedbrook said.

The research of 542 consumers with investable assets over $50,000 and 514 financial advisers was undertaken from 1 – 15 May 2006.

Other results show that the vast majority (70%) of current clients intend consulting their adviser in the next 12 months. Only 4% of clients are highly like to switch advisers in the next 12 months and 67% are likely to refer their adviser to family and friends.

Satisfaction with advisers increases with the frequency of contact and length of relationship. 91% of clients who have been with their adviser for 5 years or more expressed overall satisfaction compared to 71% for those who have consulted their adviser for less than 12 months.