Renewed confidence in advice since the Hayne royal commission has led to the number of client leads doubling in 2021 from the previous year, according to research by Vanguard and Adviser Ratings.
Rachel White, Head of Financial Services at Vanguard, says professional planner this despite an overall decrease in the number of consumers advised.
“When you explore where that’s coming from, more than half of those leads are from the over 55s and [almost] 40% were actually between the ages of 35 and 55,” White says.
Advisor ratings data Australian financial advice landscape A report published in April found that 100,000 consumers abandoned advice in 2021.
What has led to the increase in demand, says White, is that confidence in financial advice has increased since the royal commission.
“Despite the fact that confidence fell to around 35% following the royal commission, it is now at a new benchmark level of almost 50%. There definitely seems to be evidence of the benefits advice can bring that extends far beyond portfolio construction, but also supporting general financial literacy and confidence in the markets.
Research from CoreData earlier this year came to a similar conclusion, but this month’s research from the CFA Institute found Australians trust advisors less than their global peers.
White says there is an increased demand for young Australians who would like to better understand and receive help with their finances, but the rising cost of advice has made many feel unaffordable.
“64% of those seeking advice can only pay less than $500. This shows that this is a very large gap.
The report found that the median ongoing fee increased 41% over the past three years, from $2,510 to $3,529.
Netwealth research found that the “emerging affluent” cohort of millennials are the highest potential clients for advisors who have the assets to cover and justify typical advisory fees.
The AR/Vanguard report noted that higher income or asset balances are the defining characteristics of prospects across all age groups, and lower clients are unlikely to even speak with an advisor.