Investors are looking beyond traditional models of advice when seeking a financial planner, according to research from Investment Trends.
The September 2012 Advice & Limited Advice report found that only six per cent of Australian adults favoured a comprehensive, face-to-face model of advice delivery from their financial planner when realistic costs were factored in.
“Changing current business models to efficiently deliver defined scope advice specific to people’s current needs will be a key success factor for large institutions over the next five years,” Investment Trends principal Mark Johnston said.
Forty three per cent of adults included in the survey said they would prefer some other model to receive the advice they needed, signalling an industry in transition.
Investment Trends suggested a renewed focus on scaled advice would better suit clients looking for a more defined channel of advice delivery.
“The language around the discussion needs to change. Scaled advice is a terrible description because it assumes advice starts small for low balance clients and follows a steady growth path from there,” Mr Johnston said.
“The reality is many high net worth clients also want specific advice, are willing to pay for it, but have no interest in an ‘all-you-can-eat’ advice model at the current time.”
The report also found that fewer Australians are using financial planners than before the global financial crisis, with active client numbers down 20 per cent from three million to 2.4 million, over the last five years.
Despite the dropping numbers, clients were reporting higher satisfaction this year than last.
“Part of this is market driven,” Mr Johnston said.
“It’s always hard to say nice things about your adviser when your investments have just plunged, whereas this year’s survey followed a six-month rally in equities.”
With 52 per cent of the 520,000 Australians looking for a new financial planner over the next two years prioritising referrals from a friend, client satisfaction will further promote scores for planners.
Investment Trends said planners who look to service a smaller base better could experience organic growth stemming from these industry changes.
