There is a strong message for financial planners in the comprehensive survey by Rice Warner Actuaries of the self managed super fund sector – people are willing to pay extra for good strategic advice.
Rice Warner founder and chief executive officer Michael Rice says: “The survey found there was a strong correlation between the levels of satisfaction with financial advice and what people paid their advisers.
“Less than half (44%) of respondents are satisfied when the advice cost less than $500, perhaps indicating that simple advice is not sufficient in this complex professional area.
“Conversely, people who paid $1000 to $2000 are more likely to be satisfied with the advice (76%). And reinforcing this point is the fact that the respondents are strong users of a range of advice services – 87% wanted strategy and investment advice.”
In general, advice costs more if it is complex – for strategic advice, 25% of plans cost more than $2,000, while for advice that includes strategic advice and assistance in making the investments, 50% of plans cost more than $2,000.
The Rice Warner survey, commissioned by the SMSF Professionals Association of Australia (SPAA) and Vanguard Australia, asked SMSF trustees 69 questions to identify the financial needs of members and review their general concerns about retirement.
It was undertaken by 384 trustees (many are clients of SPAA members) with 279 completing it in full, with the questions ranging from SMSFs and risks, to demographics, to financial advice, and retirement planning and spending.
Vanguard Principal (Market Strategy & Communications) Robin Bowerman says: “This survey reconfirms what Vanguard sees is a huge opportunity for advisers with SMSFs driving growth in the need for specialised advice. The value of good advice comes through clearly in this report and advisers should take heart that the huge growth in SMSF establishment will in turn drive growth in the need for advice.
“For advisers developing their value proposition, the survey also demonstrates the level of sophistication of these self-directed investors with their asset allocation decisions showing clear differences in pre and post retirement choices – in particular the shift from commercial property (pre-retiree 13%; post-retiree 2%) as the investor advances into their retirement years.”
SPAA CEO Andrea Slattery says: “These findings by the survey come as no surprise to SPAA as it strongly endorses what we always stood for which is higher competencies for specialist advisers and auditors in the SMSF sector, and the fact committed professionals who genuinely add value for their clients and who go down this path with be rightly financially rewarded.
“SPAA spends a lot of time and resources promoting the benefits of specialization, with our accreditation program the first in this field to recognise practitioners who had attained high levels of competency.”
Rice says the survey found that 66% of respondents considered their advisor met their expectations, while 34% of respondents are not satisfied.
“What is interesting is to look at some of the negative comments that included:
- The adviser is more interested in the products sold rather than the return for the client.
- Advice given is too simple and general in nature, for the cost to be justified.
- The adviser doesn’t make contact; the client has to contact them.
- Financial advice from the major channels is highly conflicted by what is on their approved product lists and platforms.”
He says half of the respondents intend to seek professional financial advice in the future. “There is a clear relationship that, if someone was satisfied with previous advice, they are willing to pay more for the next piece of advice with 75% of people who are willing to pay more than $1000 for future advice are the respondents who say their advisor met their expectations.
“There is a clear challenge for advisers in these findings – develop a value proposition for your clients,” he concludes.