Nine out of 10 advised clients believe the benefits of financial advice outweigh the costs, the Value of Advice Index has found.
The index, produced by the Financial Advice Association Australia (FAAA) and presented recently, found the benefits of advice included improved personal well-being, greater confidence in people’s finances as well as a reduction in both financial and personal worries.
FAAA chair David Sharpe said the research has shown that people with a financial adviser have a higher quality of life than those who do not.
“There are demonstrable benefits, both from a tangible and intangible point of view,” Sharpe said.
“The value of advice index is really clear that seeing a financial adviser has a demonstrable improvement on people’s financial wellbeing, their satisfaction, their confidence in their finances as well.”
The cost of providing financial advice has exploded in the years after the Hayne royal commission as the cost to serve has increased along with a smaller pool of advisers that remain in the industry.
Research from Investment Trends found the average ongoing advice fee was $5,500 after the last few years have seen a multi-thousand dollar rise in average fees.
The current Albanese government, through Minister for Financial Services Stephen Jones, has sought to reduce the cost of advice by addressing several red tape measures via the Delivering Better Financial Outcomes legislation, although only part of the reforms has passed into law with just months remaining before the next federal election.
The legislation, designed off the back of the Quality of Advice Review, aimed to improve efficiency for advice businesses by streamlining fee consent requirements and eliminating Statements of Advice in favour of simpler advice records.
However, at a time when financial advice is at its most expensive, existing clients consider it to be worth the money.
Financial advice has considerably improved the confidence of advised clients regarding their finances. The index revealed confidence in finances for clients of certified financial planners (CFPs), which has increased from 61% in 2023 to 75% in 2024. This is significant at a time of financial uncertainty and added stress, reported Professional Planner.