The amount Australians are prepared to pay for financial advice has fallen owing to pressure on fees following the global financial crisis (GFC), an industry report has found.
The trend was expected to continue while the cost pressure showed no sign of easing, Investment Trends noted from the findings of its "2011 Advice and Limited Advice" report.
"What we are seeing throughout our research is that there is growing pressure on fees," Investment Trends senior analyst Recep Peker told InvestorDaily.
"What normally happens after a financial crisis is that pressure will come on fees in the retail wealth management industry and usually it would be a relatively short-term effect.
"But what we have seen since the GFC is the pressure on fees just building and building and this is affecting how much people are prepared to pay for financial advice."
The fee pressure was affecting satisfaction with super fund fees, with Australians expecting to pay less for their financial advice than they previously did, he said.
"We track satisfaction of Australians with their financial planners and they are less satisfied with the fees they are paying, [but] relative to previous years their satisfaction in terms of value for money has not changed," Peker said.
"Previously what we saw is that pressure will come on fees then dissipate over time, but what is interesting this time round is that it keeps building. I don't know how long it will build. Eventually, once the markets start doing well again, the pressure will probably leave."
The report found that in 2011, the average Australian expected to pay $590 for financial advice, down from $670 in 2010.
Those expecting to develop a comprehensive financial plan for the first time expected it would cost $770.
"With planners estimating that it costs $2550 to provide comprehensive advice, there is a clear gap between the expected and actual cost of advice," Peker said.
"Planners recognise this, and two in five intend to provide more transactional and single-issue advice in the future."
Australians who had already received advice said they were prepared to pay $970 in total for an update, which suggested they had a better appreciation of the value of advice and the cost involved in providing it, though still low.
