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| Fabian Ross |
Australian consumers have a skewed perspective of how much it costs to provide financial advice because commissions have hidden the true cost of advice for so long, according to new research from GESB.
Almost half of Australians thought less than $500 per year was appropriate for a five-year financial plan, the research revealed. About one in five thought between $501 and $1,500 was appropriate, while just 1 per cent thought $3,001 to $4,000 was fair.
“Our research demonstrates a significant disconnect between the realistic cost of providing comprehensive financial advice and what consumers expect to pay for it,” said the general manager of wealth management at GESB, Fabian Ross.
Consumers were confused about how to treat the advice they received, with only 40 per cent saying they would follow a financial plan precisely. A third would follow only parts of a plan and one in 10 would not expect to get any use from a professionally prepared financial plan.
“In the absence of education giving sight of both the true cost and value of financial advice consumers are less likely to take up advice, thinking it is both expensive and irrelevant,” Ross said.
“This will leave their efforts to save through super subject to a range of risks, including market fluctuations, inflation and longevity, at a time when they are striving to reach more adequate levels of retirement savings,” he said.
