Trust in financial advisers remains high
Trust in financial advisers remains high year on year, according to the latest Value of Advice Index from the FAAA.
The Financial Advice Association Australia report found that 93 per cent of advised Australians say that they are tangibly better off because of their adviser, while nearly two-thirds (64 per cent) report a positive impact on their mental health.
Additionally, younger Australians working with financial advisers were also better off financially, with observed improvements in quality of life and financial confidence that were even greater than those of Baby Boomers.
The index compared responses from those who work with a financial adviser with those who don’t across four key areas: quality of life, financial confidence, financial satisfaction, and their experience with their adviser.
This year’s results found that Australians working with a financial adviser report that they are better off, with nearly two in three advised Australians reporting that they are highly satisfied with their wealth, enjoying a higher quality of life, more financial confidence, and less financial stress, compared to close to one in three unadvised consumers.
In all, 88 per cent of advised Australians feel that they are on track to have enough money to last their retirement, compared to 62 per cent of unadvised Australians.
Furthermore, the report revealed that 96 per cent of advised Australians feel that having a financial adviser has helped them remain confident in their financial strategy during market volatility and geopolitical uncertainty, with 81 per cent feeling that their adviser’s value increases during these periods.
Sarah Abood, CEO of the FAAA, said the Value of Advice Index showed Australians continued to trust financial advisers.
“It’s been a tough year. Cost-of-living pressures are still very real, and while inflation has eased a bit, economic uncertainty and global events continue to weigh on household confidence,” Abood said.
“But even with all that, the indicators we track around the value of advice continue to show the positive impact of financial advice. In fact, the difference between those who have advice and those who don’t is growing as Australians are seeing the value of financial advice, not despite uncertain markets, but because of them.”
The research highlighted that financial advice helps consumers fulfil unmet financial needs, with nearly two in three stating they had a reduction in financial stress and worry and were able to build a realistic plan for a comfortable retirement.
The research also explored Australians’ attitudes to digital advice and found that, given the choice between fully digital advice, human-led advice, and a hybrid model, people were most likely to prefer human-led advice, with limited use of digital tools.
According to the research, Baby Boomers were less open to digital advice, with three in five preferring human-led advice only, compared to one in two Gen X and fewer than one in two Gen Y.
Baby Boomers also believed that personalised guidance could only be provided by humans, not digital-only advice (four in five), compared to fewer than three in five Gen Y and Gen X, with Gen X and Gen Y being open to AI being used as part of the advice process for things like administrative tasks.
The research also busted some long-established myths around financial advice.
“The research this year flags many things, but what shines through is the trust in financial advice and advisers from Australians to help keep them on track and achieve their goals,” Abood said.
“We know that consumers think that you need to be rich to afford financial advice, but our research shows otherwise. Nine in 10 of those surveyed who earn $120,000 a year or less and work with an adviser feel financially secure - well above the level of unadvised consumers on the same income.”