What’s the value of a CFP?

At a media briefing in Sydney on Wednesday, the Financial Advice Association Australia (FAAA) unveiled its latest Value of Advice Index, based on insights from consumer research undertaken by independent research firm MYMAVINS.

The index compares responses from Australians that both work with an adviser and those who don’t, as well as those who work with a Certified Financial Planner (CFP), across quality of life, financial confidence, financial satisfaction, and their experience with their adviser.

Looking at these key metrics, the index scores responses on a range from 0 to 100 and found that advised Australians say they experience higher quality of life, financial confidence and financial satisfaction than those who are unadvised.

FAAA chair David Sharpe said the results highlight the importance of working with a professional financial adviser.

“It is well understood that financial wellbeing is connected with overall health and wellbeing,” Sharpe said.

“The FAAA Value of Advice Consumer Research study makes clear the link between getting quality financial advice and having better quality of life and less financial stress.

“The study was undertaken at a time when many people are experiencing cost-of-living pressures, from their supermarket shopping to their mortgage. In this environment, it is fantastic to see that those who work with a financial adviser feel more financially secure and able to face current challenges.”

The index also broke the responses down to split out responses from Australians that work with a CFP, with the responses even more positive.

Looking at quality of life, unadvised respondents rated at 62, while non-CFP advised clients were at 71 and CFP advised clients rated a 77.

The difference was even more stark when looking at financial confidence and financial satisfaction, with unadvised cohort rating 57 and 55, respectively. Advised clients, however, landed at 70 and 69, while CFP advised clients rated 75 for both.

Looking at their personal advice experience, CFP clients rated it an 84, while non-CFP clients were lower at a still solid 74.

“It was really clear to see that the professional delta that we’re calling it for seeing a CFP professional is an additional step up,” Sharpe said on Wednesday.

“It isn’t really a surprise. CFPs go through significant additional study. It’s blood, sweat and tears. I can tell you, nearly two decades since I went through and I’m talking to recent CFP graduates, and they’re telling me it’s still bloody tough to get through.

“So, that professional commitment to get to the gold standard of professional advice is being laid there as well in this index.”

The sentiment among both advised clients and CFP advised clients have made dramatic improvements since the previous year’s report, with financial confidence (+14 for CFP professional clients, +10 for clients of other financial advisers), and financial satisfaction (+15 for CFP professional clients, +11 for clients of other financial advisers) showing the largest gains.

Meanwhile, figures for the unadvised from this year are relatively close to last year’s where scores range between 51 and 63 and are relatively lower than clients of financial advisers.

Also among the findings was that trust in financial advisers among clients has reached a record high, with 94 per cent reporting that they trust their financial adviser to act in the client’s best interests.

Similarly, 94 per cent of financial advice clients said their adviser has supported them to make the best possible financial decisions, 93 per cent said their financial adviser has helped them manage financial risks in their life, and that the services provided by their financial adviser have met their needs.