According to Adviser Ratings, only 12.2 per cent of the population used an adviser in 2019, down from the year before. ASIC wants to know how Australians can find affordable, quality advice and issued Consultation Paper 332 to find out.
Firstly, what is affordable advice? ASIC report 224 found on average, consumers believe initial advice should cost only $301 and ongoing advice $298 per annum. The financial Planning Association found in 2020 that the average cost to set up a financial plan was around $3,300 and $4,300 annually for ongoing advice. This is ten times consumer expectations, without adding implementation, on-going, investment and other costs.
Secondly, what is quality advice? Is it a 50 page statement of advice that is compliant but largely unintelligible to most consumers. Is it scaled or digital advice? Feedback on CP 332 indicated ASIC’s own advice example (RG90) was long, repetitive and not client-friendly.
Will tech be the saviour, bringing down costs and providing more engaging advice? With just a few clicks, Merrill Lynch advisors can create interactive videos with real-time client data. Enlightened Financial Services in McKay deliver scoped advice in video format. Finchat offers a health check using voice and tap only.
Generations X, Y, Z etc, rely on free advice. YouTube videos like Mad Money, chat rooms and TikTok “influencers”. Accessible, affordable but dangerous advice.
Will ASIC find the Holy Grail?