Cost disconnect impacting access to advice: Report

According to the latest Adviser Ratings Australian Financial Advice Landscape report, more than two-thirds (68 per cent) of Australians see the benefit of having a professional financial adviser.

However, not only are consumers only willing to pay an average of $911 for advice from a professional financial adviser, but this number drops even further for those who don’t currently have a financial adviser. This cohort is only willing to pay an average $553, which is a drop from $651 in 2022.

As the report points out, despite what consumers are willing to pay, just 6 per cent of advisers have fees for new clients under $1,500.

Only 8 per cent of consumers surveyed said they would pay between $1,000 and $2,500, while 6 per cent were willing to go above that figure.

“In Australia, there is a population of approximately 10.5 million unadvised consumers,” the report said.

“Of those 10.5 million, only 24 per cent of them are considering obtaining an adviser in the future (almost 2.3 million). If we take into account consumers who can afford the cost of an adviser, this number decreases to 1.5 million.”

That figure of 24 per cent is up from 20 per cent in 2022, which shows a significant increase in demand that is “not translating into higher numbers of advised Australians”.

“There are two major reasons for this,” the report said.

“The first is a shortage of advisers after a strong exodus from the industry in recent years. The second is that most people can’t afford or are unwilling to pay the average adviser fee.

“As a result, the proportion of Australians who use a financial adviser remains little changed from the prior year at 10.4 per cent, a slight uptick from last year.”

While the report noted that this is not a large improvement from last year, it does represent the first increase in the number of advised Australians since before the financial services royal commission.

According to Adviser Ratings, in 2019, the advised population made up 13.9 per cent of Australians, which fell consistently to 10.1 per cent in 2022 before flattening at 10 per cent last year. Even though the growth in 2024 is small, it marks an important reversal of this long-term trend.

Unsurprisingly, younger Australians are less likely to be advised, with just 2 per cent of those aged 21–34 engaging with a financial adviser. This increases to 7 per cent for those aged 35–44, 13 per cent for 45–54, and 16 per cent for those 65 and over. The pre-retiree age group (55-64), also unsurprisingly, topped the results at 22 per cent.

Adding to the value of advice, the report also found that advised consumers see themselves as more financially literate than unadvised consumers.

“In 2024, advised individuals also demonstrate more confidence in their finances for the next 12 months. Conversely, the unadvised group displays lower confidence levels, with 27 per cent feeling not at all confident about their financial future,” it said.