Trust in financial planners and banks is at a record low due to the bad behaviour revealed in the financial services royal commission but Australians still want financial advice.
The 2018 Financial Advice Report from Investment Trends found that an estimated 2.1 million adults intend to turn to a financial planner for advice, up from 1.6 million in 2017.
However, trust levels in banks and financial planners fell severely over that same period. On a scale of 0 to 10, banks fell from a trust rating of 5.5 to 4.8, while financial planners fell from 5.1 to 4.8.
The report found more than 40% of Australians do not believe the financial services and banking industries are meeting their obligations to everyday citizens.
Most who use a financial planner are still satisfied with the service they get but are now less willing to recommend it.
Investment Trends senior analyst King Loong Choi said the trust impact of the royal commission is real, and the advice industry must take proactive measures to rebuild trust among the wider population.
“One of the most important steps involves lifting transparency in every single aspect of the advice process,” Choi said.
On the client front, Choi said the top barriers to seeking advice involve not having the time to find an adviser, perceptions of high fees and perceptions of insufficient wealth.
“It is therefore vital that advice providers demonstrate the value of advice to potential clients in the context of their time and money. Potential clients must be convinced they need financial advice now, not later in life, and that the fees justify the service,” Choi added.