King Loong Choi

Leading research firm Investment Trends has launched its flagship 2020 High Net Worth Investor Report, the largest annual study of Australia’s wealthiest investors (defined as those with over $1 million in investable assets outside their own home, business and non-SMSF super).

Now in its thirteenth year, the Report shows that there are 485,000 HNW investors as at September 2020 – a figure similar to 2019 (490,000) but still significantly larger than 2018 levels (460,000).

“The size of the Australian HNW population remains resilient despite tough market conditions at home and abroad. While the uncertain investing climate had minimal impact on market size, it has profoundly impacted the attitudes and preferences of HNW investors towards investing and advice,” said King Loong Choi, Associate Research Director at Investment Trends.

When it comes to their views about financial advisers, the Report reveals a significant growth in the ‘validator’ segment – described as those who would consider using an adviser because they value a second opinion, for their access to a wide array of investments, and their technical skills.

“The last 12 months saw a large shift in the perceptions of advice among HNW investors, with a sharp increase in ‘validators’ who are open to receiving financial advice (56%, up from 40% in 2019) and a corresponding fall in ‘self-directed’ HNWs who prefer making decisions on their own (34%, down from 49%),” said Choi.

The positive shift in attitudes towards advice providers, however, has not led to greater uptake. Over the last 12 months, the use of financial planners (19%) full-service stockbrokers (15%), wealth managers (7%) and private banks (5%) has largely remained static.

“The disjoint between the positive views towards advice providers and the current muted uptake of advice highlights how advice providers need to rethink their value proposition and delivery model,” said Choi.

“The uncertainties caused by the pandemic has prompted many HNWs to reconsider how they view professional financial advice, which presents a unique opportunity for advice providers to demonstrate their value-add – through their technical expertise, guidance and proactive communications.”

About the report

The Investment Trends 2020 HNW Investor Report examines the advice and product needs of Australian HNW investors, including their relationships with private banks, full-service stockbrokers, business banks and fund managers.

The 13th edition of the Report is based on a quantitative online survey of Australian HNW investors, conducted in September 2020. This is the largest ever study conducted in this space, drawing on responses from 2,578 HNW investors (collectively holding over $2.0 trillion in investable assets).  The Report is focused on investors with over $1 million in net investable assets, excluding their super, primary residence and own business, but including their SMSF assets (if any).

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King Loong Choi

Leading research firm Investment Trends has launched its 2020 Platform Benchmarking & Competitive Analysis Report, an in-depth study of investment platforms used by Australia’s financial advisers and their clients.

Digitalisation of key processes was a key focus area for platforms, according to the latest report now in its 17th year.

The Report found that platforms are responding to calls from financial advisers to better support their socially distanced advice processes, with notable functionality improvements around electronic signatures and digital acceptance tools.

“The platform industry continues to drive innovation and functionality improvements from the back-end to front-end, which is especially vital as financial advisers and their clients adjust to a social distanced way of living. The move to a paperless, fully-digital end-to-end process is fast becoming a reality,” said King Loong Choi, Associate Research Director at Investment Trends.

Choi added that, “In the last 12 months alone, HUB24 and MLC MasterKey have incorporated electronic ID verification services to automate KYC checks and super withdrawals, while Praemium and CFS FirstChoice launched tools for advisers to electronically send documents to clients for digital acceptance. Improvements that reduce admin friction and help foster greater client engagement will be increasingly sought after by advisers and their clients, as more embrace end-to-end digital solutions.”

For overall platform functionality ranking, HUB24 has marginally overtaken Netwealth for top spot, with consistently strong results across all six assessed categories. In a close second position, Netwealth continued to perform strongly in four out of six categories. Industry wide, the five top-ranking full-function platforms are:

1. HUB24 (overall score of 89.0%)
2. Netwealth (88.9%)
3. Praemium (84.8%)
4. BT Panorama (82.4%)
5. Macquarie Wrap (76.5%)

“The narrow difference in overall platform functionality scores highlights the intense competition between the leading platforms, many of which have made meaningful refinements to their product offering, reporting, decision support tools and integration in the last 12 months,” said Choi.

Advisers also considered consolidated reporting as a key focus area for platforms – which involves aggregating client data from custodial and non-custodial assets into a single source, ultimately providing clients with a holistic view of their total wealth.

Non-custodial functionality varies markedly across platforms, with Praemium’s Virtual Managed Account (VMA) currently the most comprehensive solution. Other platforms are also providing strong competition, with HUB24’s HUBConnect making strides to improve their client app experience, while BT Panorama are providing SMSF trustees with a view of their external assets from their connected accounting software.

“Platforms are fundamentally custodial solutions, but many recognise the need to expand their functionality to integrate non-custodial assets. We expect to see more innovative developments as different platforms take different approaches to deliver non-custodial asset solutions,” said Choi.

About the report

The Investment Trends 2020 Platform Benchmarking & Competitive Analysis Report is based on detailed analyst reviews comparing 15 leading wrap platforms and master trusts across 6 categories of their service offerings, encompassing 538 key criteria.

Functional items are given weightings to reflect their relative importance to advisers, based on Investment Trends’ ongoing annual Planner reports, which are detailed quantitative surveys that track adviser’ platform and product preferences.

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King Loong Choi

Investment Trends has released its 2020 Planner Risk Report, an in-depth survey of Australian financial planners who provide advice on life insurance.

The pandemic has challenged financial planners to reassess their delivery of risk advice

The latest research from Investment Trends reveals that the majority of financial planners (80%) made changes to their delivery of risk advice in response to disruptions from the COVID-19 pandemic.

Amidst the pandemic, planners most often say they engaged with their clients more frequently (30% cite this), scrutinised premium levels (23%) and quality of service (23%) when selecting insurers, and accelerated their adoption of technology in their risk advice process (22%).

“Financial planners are reevaluating all aspects of their delivery of risk advice – from their insurer relationships and technology stack, to the way they communicate and demonstrate value to clients,” said King Loong Choi, Associate Research Director at Investment Trends.

“As planners help their clients navigate the pandemic, support from their insurers and technology partners will be crucial to lifting the quality of their risk advice,” said Choi.

Insurers who delivered proactive BDM support and streamlined online processes were more highly regarded

In 2020, the top challenge faced by planners in providing risk advice were rising premiums (61% cite this), ahead of compliance obligations (53%) and paperwork/admin requirements (50%). Against this backdrop, the insurers that stood out were those that effectively helped planners alleviate these issues.

“When asked to describe in their own words how insurers helped them navigate COVID-19, planners most often acknowledged premium relief for impacted clients, proactive BDM contact and streamlined online processes,” said Choi.

“Competitive premiums matter for planners and their clients in their choice of insurer, but it isn’t the sole factor. Planners highly value proactive support, meaning that insurers that provide quality BDM support, ongoing communications and quick turnaround times will stand out.”

NEOS ClearView leads satisfaction rankings for the third consecutive year

Investment Trends measured planner satisfaction with their main life insurer across 31 key service areas, including their overall satisfaction. Industry wide overall satisfaction fell significantly amidst the pandemic, with only a quarter of financial planners rating their main insurer as ‘very good’ compared to 57% in 2019.

At the provider level, NEOS has marginally overtaken ClearView for top spot in overall satisfaction in 2020, with 56% of primary users rating it as ‘very good’ compared to 54% for ClearView. The top three life insurers by overall planner satisfaction are:

1. NEOS
2. ClearView
3. Zurich

About the report

The Investment Trends 2020 Planner Risk Report examines Australian financial planners’ advice on life insurance, including their use of investment platforms and planning software when providing advice on insurance. The results are based on an in-depth survey of 524 financial planners concluded in October 2020.

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King Loong Choi

Investment Trends has released its 2020 Financial Advice Report, an in-depth survey of the appetite and use of financial advice among Australians.

Key highlights:

• The COVID-19 lockdown has spurred greater engagement between financial planners and their clients
• Demand for financial advice has doubled in the last five years
• Australians consider their super fund a viable source of advice, but welcome a broader range of topics

The COVID-19 lockdown has spurred greater engagement between financial planners and their clients

Financial planners have endeavoured to keep their clients informed and engaged amidst the COVID-19 pandemic. The latest research shows that three in four clients have been in contact with their financial planner to discuss the impact of the pandemic. In most cases, clients say their financial planner initiated first contact (49%) while among the rest, the client reached out first (24%).

“Most financial planners have proactively engaged with their clients during this period of volatile markets, and clients themselves acknowledge these efforts,” said King Loong Choi, Senior Analyst at investment Trends.

Proactive communications regarding COVID-19 contribute significantly to higher client satisfaction. For instance, clients who had to initiate first contact typically rated their overall satisfaction with their planner less favourably than planners who were proactive (composite score of 56% vs 73%).

“As the lockdowns persist, all planners must take the opportunity to engage more closely with their clients – through the most in-demand channels. In light of the lockdowns, just a third of advised clients still insist on receiving face-to-face review meetings (down from 48% in 2019), while appetite for alternative, socially distanced regular reviews has substantially increased,” said Choi.

Demand for financial advice has doubled in the last five years

The demand for financial advice has surged, with 2.6 million non-advised Australians intending to seek help from a financial planner in the next two years. This figure is up significantly from 2.1 million in 2019, and double the levels observed in 2015 (1.3 million).

“Against a backdrop of economic uncertainty and volatile markets, a record number of non-advised Australians realise they need professional financial advice. Among these potential advised clients, the pandemic has been a major catalyst, with 44% saying the COVID-19 situation had increased their likelihood of seeking advice,” said Choi.

“Potential clients overwhelmingly prefer receiving comprehensive advice over limited advice (76% cite this vs 35%). But when cost is factored in, preference for limited advice markedly increases,” said Choi.

“Still, there are opportunities to transition those who want limited advice to a holistic advice offering, since the vast majority of potential clients (61%) are open to upgrading to comprehensive advice over time.”

Australians consider their super fund a viable source of advice, but welcome a broader range of topics

There is strong awareness, uptake and interest to access financial advice services offered by super funds. Nationwide, one in six Australians say they currently use intra-fund advice services offered by their main super fund. Among those who don’t, 37% would like to do so.

“Many members rely on their super fund for help across a range of intra-fund topics, most often seeking advice around voluntary super contributions, switching investment options and retirement planning,” said Choi.

“Yet, there is enormous demand for topics outside the current scope of intra-fund advice, particularly among younger super fund members (77% of those under 35 would like to receive this vs 70% for the broader population). The key areas of interest include investments outside super, tax strategies and budgeting assistance.”

“Further, advice via super funds can lead to planner referrals, with 55% of members open to being transferred to a planner. Older members favour a super fund-based planner, while their younger counterparts are more inclined to seek out an independent planner,” added Choi.

About the report

The Investment Trends 2020 Financial Advice Report is based on a survey of 4,501 Australian adults, concluded in July 2020.

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King Loong Choi

Investment Trends has released its 2020 Super Fund Member Sentiment and Communications Report, an in-depth look at the attitudes, needs and priorities of Australian super fund members.

Key highlights:

• Australians are paying closer attention to their super amidst the global pandemic
• Education leads to greater member engagement and confidence
• ESSSuper and UniSuper stand out for member satisfaction

Australians are paying closer attention to their super amidst the global pandemic

Australians believe the COVID-19 pandemic will have a lasting impact on their investments and finances. In the aftermath of the sell down in equities in early March, half of super fund members believe it will take 12 months or longer for their super balance to recover fully. Less than a quarter (23%) expect a full recovery by the end of 2020.

“The global pandemic and its resulting market volatility have prompted Australians to pay closer attention to their super. Their engagement with their super investments is growing, meaning that super fund members are now more active stewards of their money,” said King Loong Choi, Senior Analyst at Investment Trends.

“As members scrutinise their super balance and performance more closely, it is important that super funds continue keeping members informed, educated and confident in weathering heightened market volatility,” said Choi.

“At present, just 61% of members believe their super fund’s range of investment options is sufficient to meet their needs while 31% say they are unsure, further highlighting the need to alleviate members’ knowledge gaps.”

Education leads to greater member engagement and confidence

Most members (68%) have actively sought guidance from their super fund, particularly to find basic information such as fees and insurance premiums, their likely balance at retirement and the balance needed to retire comfortably.

As Australians engage more directly with their super fund, their satisfaction and confidence rises. Those who sought guidance tend to be more satisfied with their funds’ efforts to help them feel confident about the future (composite satisfaction score of 72% vs 65% among those who have not sought guidance).

“It is vital that super funds continue promoting and facilitating their member guidance services, given its positive, tangible impact in lifting member engagement and confidence,” said Choi.

“Confident, well-supported members are more satisfied with their super fund and empowered to take steps to improve their situation in retirement. After seeking guidance from their super fund, three in four members are driven to take action, most often to compare super funds (23%), make voluntary contributions (20%), consolidate their funds (19%) or change investment options (19%),” added Choi.

ESSSuper and UniSuper stand out for member satisfaction

Industry wide, members’ overall satisfaction with their super fund only declined marginally in the past year despite headwinds from the pandemic and recent legislative changes (composite satisfaction score of 67%, down slightly from 68%).

ESSSuper (82%) and UniSuper (80%) remain the highest rated super funds, while Australian Catholic Super (77%) overtook Cbus (76%) for third spot.

“Super funds have done well to maintain member satisfaction levels despite unprecedented macro headwinds,” said Choi.

“At the industry level, the communications provided by super funds during the pandemic have been effective in lifting satisfaction ratings and reducing associated satisfaction gaps. However, there is still room to improve the frequency and quality of communications outside of annual statements.“

About the report

The Investment Trends 2020 Member Sentiment and Communications Report provides a detailed analysis of the Australian superannuation industry, examining sentiment, attitudes and needs of superannuation fund members.

Based on a survey of 6,383 respondents, the Report is the largest and most comprehensive independent study of Australian super fund members.

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King Loong Choi

Investment Trends has released its 2020 SMSF Accountant Report, an in-depth survey of Australian accountants in public practice who service the Self-Managed Super Fund (SMSF) sector.

Key highlights:

• Accountants want to expand their role in the SMSF space
• There is a significant pool of potential SMSFs
• BGL leads satisfaction ratings

Accountants want to expand their role in the SMSF space

The SMSF sector remains a substantial component of the superannuation industry, comprising a quarter of the $3 trillion in total super assets nationwide (based on the latest APRA data from December 2019).

However, growth in the SMSF market has declined to a decade-low, with the annual establishment of new SMSFs falling from a high of 40,000 in 2012 to only 20,000 in 2019. Despite this weakness, the latest research from Investment Trends shows that accountants want to grow their role with SMSF Trustees.

“Accountants already play an influential role in the SMSF space, with accounting firms serving 129 SMSF clients each, on average. But given the choice, accountants would ideally like to grow their firm’s SMSF client base by 35% from 129 to 174 clients,” said King Loong Choi, Senior Analyst at Investment Trends.

“In their quest to serve more SMSF Trustees, accountants say their top challenges are regulatory in nature, ranging from licensing restrictions on providing financial advice (49% say so), heightened regulation in setting up SMSFs (34%) to compliance obligations (31%).”

“However, many accountants also face issues on the client-facing side, such as competitive pricing/fee recovery (38%) and attracting new SMSF clients (29%),” explained Choi.

There is a significant pool of potential SMSFs

Despite the decline in the establishment of new SMSFs in recent years, accountants say that many of their existing clients show interest in setting up their own SMSF.

“SMSF Trustees already comprise a large segment of accountants’ total client base (36%, on average). Still, accountants estimate a further one in eight of their clients are suitable for an SMSF, and half of this cohort has expressed an interest in establishing one,” said Choi.

“Given the large pool of potential SMSFs, there is a clear opportunity for service providers to help accountants better serve this segment. To help educate clients and facilitate SMSF set up, accountants want to be better equipped to explain the suitability of SMSFs (52%), and the roles and responsibilities of Trustees (49%),” said Choi.

BGL leads satisfaction ratings

Looking at the specialist software used by accountants to service SMSFs, BGL Simple Fund 360 leads in satisfaction ratings, with 35% of users rating it as ‘very good’ overall, ahead of Class Super (29%) and SuperMate (17%).

“Industry wide, SMSF software providers continue to serve accountants well, and not many satisfaction gaps remain across 16 key satisfaction areas measured. But recently, ease of use has grown significantly in importance as a driver of overall satisfaction, so providers must pay close attention to usability – an area that is at risk of becoming a satisfaction gap.”

“To further stand out, software providers can differentiate through their ongoing training support, client portal and perceived value for money,” said Choi.

About the report

The results are drawn from the Investment Trends 2020 SMSF Accountant Report, released to Investment Trends’ clients in May. The report, now in its fourteenth year, is based on a survey of 715 accountants in public practice that was concluded in March 2020.

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King Loong Choi

Leading research firm Investment Trends has released its latest Retirement Income Report, an in-depth study of Australians’ attitudes towards retirement and post-retirement issues.

The report, now in its tenth year, draws on the responses of 5,210 Australian adults.

Key highlights

• Many Australians worry about their retirement prospects, but a small increase in super contributions has a significant impact on peace of mind
• When Australians find relevant, accessible retirement-related information, they are very likely to take steps to improve their retirement outcomes. But finding it is tough

Many Australians worry about their retirement prospects, but a small increase in in super contributions has a significant impact on peace of mind

The latest research from Investment Trends reveals that fewer than half (47%) of working Australians above the age of 40 believe they are prepared for retirement.

For these Australians, a belief they do not voluntarily contribute enough into their super is a key source of their pessimism – nationwide, only a quarter of non-retirees believe they are contributing enough to retire comfortably.

“While many Australians worry about their retirement prospects, there is only a small difference in superannuation contribution levels between those who fear being unable to retire comfortably and those who are positive about their prospects,” said King Loong Choi, Senior Analyst at Investment Trends.

“Australians who believe they will live comfortably in retirement typically contribute 11% of their annual household income into their super fund, meaning that an additional contribution of 1.5% p.a. above the Super Guarantee level (of 9.5%) contributes significantly to their peace of mind. Even among lower income households, a slight increase in super contribution levels corresponds with greater confidence in retirement outcomes,” explained Choi.

“Super funds and retirement product manufacturers can play an important role in encouraging Australians to start thinking about their retirement from an earlier age, and show them how a small increase in their super contributions can make a significant difference.”

When Australians find relevant, accessible retirement-related information, they are very likely to take steps to improve their retirement outcomes. But finding it is tough

Few non-retirees have actively sought and found information pertinent to their financial situation at retirement. In 2019, two in five non-retirees searched for retirement-related information, but among these individuals, only half say they found what they needed.

“Currently, super funds are the most frequent point of contact for those seeking information on retirement, but with only half saying their info needs were sufficiently met, there is room to improve both the accessibility and relevance of content,” said Choi.

“It is crucial that relevant retirement information is easy to find, as those who successfully find the information they need are highly likely to take further action – almost 90% of them. And the actions these people take are important ones, most often preparing a will, seeking financial advice and making voluntary super contributions,” explained Choi.

“Our research also reveals that Australians who were successful in seeking information from their super fund were more likely to engage with their fund, stay with their fund and consolidate other super monies to their fund.”

About the report

The tenth edition of the Retirement Income Report provides a detailed analysis of Australian adults and their attitudes towards retirement and post-retirement issues. This report is based on a large-scale survey of 5,210 Australians over the age of 40, conducted between September and October 2019.

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King Loong Choi

Leading researcher Investment Trends has released its 2019 Platform Benchmarking & Competitive Analysis Report, an in-depth study of the investment platforms used by Australia’s financial planners and their clients.

Key highlights:

• Netwealth continues to lead the market for overall platform functionality, closely followed by HUB24
• Macquarie Wrap’s Digital Portfolio Manager is helping advisers deliver affordable scalable advice
• Platform managed accounts functionality is broadening to assist both new and sophisticated users

Netwealth continues to lead the market for overall platform functionality, closely followed by HUB24

In the sixteenth edition of the Report, Investment Trends benchmarked the industry’s 18 leading platforms across 6 categories, encompassing 509 key criteria.

The extensive and in-depth scoring process revealed Netwealth as the leader in overall platform functionality, marginally ahead of HUB24. BT Panorama maintained third spot to edge out Praemium, a new entrant in this year’s Report.

“Over the last 12 months, platform functionality scores have improved in a wide range of areas. The final scoring differentials between the leading platforms across such a vast set of considerations are narrower than ever, reflecting the intense competition and rivalry in the space,” said King Loong Choi, Senior Analyst at Investment Trends.

“Many platforms have introduced a host of improvements to help advisers further demonstrate their value add to clients, ranging from fee cuts to improved fee comparison tools, managed accounts functionality and retirement calculators.”

Industry wide, the five top-ranking full-function platforms are:

1. Netwealth
2. HUB24
3. BT Panorama
4. Praemium
5. OneVue

Macquarie Wrap’s Digital Portfolio Manager is helping advisers deliver affordable scalable advice

Compliance, admin and paperwork continues to be a major burden for financial advisers from a time and cost perspective, preventing them from spending more time with their clients and potentially servicing more clients. B2B digital advice solutions such as robo-advice has been touted as a potential solution, but current options remain relatively niche.

Macquarie Wrap has made headway in addressing this challenge with the introduction of their Digital Portfolio Manager, a combined digital advice tool and end-to-end portfolio management engine. Their Digital Portfolio Manager automatically aligns client portfolios to a target that reflects an adviser’s investment philosophy, with full automation of advice documentation and digital authorisation requests to clients and advisers.

“For its innovative approach in helping advisers deliver scaled advice in an affordable manner, the Macquarie Wrap Digital Portfolio Manager is a worthy recipient of Investment Trends ‘Best New Functionality’ Award,” said Choi.

Platform managed accounts functionality is broadening to assist both new and sophisticated users

Managed accounts remains a key development area for platforms as these solutions continue to gain popularity among financial advisers (35% recommended it in 2019, up from 30% in 2018). Of the 18 platforms evaluated, 13 currently offer managed accounts in some shape or form.

In 2019, functionality improvements largely focused on CGT modelling tools, improved ability to substitute and exclude direct stocks, and equipping model managers with tools to better monitor and manage their models.

“Platforms are aware that more financial advisers are starting to use managed accounts, while existing users are using these solutions more extensively. As a result, improvements in the last 12 months focused on helping both new entrants and also model managers who demand greater flexibility and functionality,” said Choi.

“HUB24 made the most notable managed accounts-related improvements in 2019, and its efforts are recognised as Investment Trends’ ‘Best Platform Managed Accounts Functionality’ Award,” said Choi.

About the report

The Investment Trends 2019 Platform Benchmarking & Competitive Analysis Report is based on detailed analyst reviews comparing 18 leading wrap platforms and master trusts across 509 aspects of their service offerings.

Functional items are given weightings to reflect their relative importance to advisers, based on Investment Trends ongoing annual Planner Technology Reports, which track adviser preferences around their platforms based on detailed quantitative surveys.

Investment Trends Planner Technology reports are used by virtually all major Australian investment platforms to understand evolving adviser needs, assess their standing versus competitors and track trends emerging across the industry.

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King Loong Choi

Leading research firm Investment Trends has released its latest Investor Product Needs Report, an in-depth study of Australians’ investing behaviour and their use of various investment products.

The study, now in its fourteenth year, is based on a survey of 7,933 Australian investors:

Investor sentiment remains grounded amidst rising markets

As we enter a new decade, Australian investors’ outlook for domestic stocks remains subdued despite the market’s strong performance in 2019. The latest research from Investment Trends shows that the average investor only expects the All Ordinaries Index to rise by 1.9% over the coming 12 months – despite the All Ords gaining 11.0% in the 2019 calendar year.

“Australians have gradually revised their outlook for domestic stocks downwards. Their 12-month forward looking expectations for the All Ords failed to rise above 2.0% throughout 2019, even falling into negative territory in August 2019. This comes in stark contrast to the 2.0% to 4.0% levels typically observed between 2014 and 2018,” said King Loong Choi, Senior Analyst at Investment Trends.

“Global macroeconomic and geopolitical tensions continue to weigh heavily on investors, and their bearish sentiment has prompted many to adopt a more defensive stance in their asset allocation.”

Managed investment products are rising in popularity

Australians are shifting their investing priorities in line with their subdued market outlook. When asked to describe their main investment objective over the coming 12 months, fewer are aiming to maximise capital growth (21% cite this, down from 26%). Instead, more investors say their main goal will be to protect their assets and income from market falls (15%, up from 11%).

“More investors are prioritising capital preservation and generating a stable income stream. To effectively achieve these priorities, many realise they need a diversified portfolio, which has led to the rising adoption of managed investment products,” said Choi.

“Across the range of managed investments, Australian investors currently allocate the largest proportion of their total portfolio to unlisted managed funds (7%, on average), while ASX-listed investments such as ETFs and LICs are gaining popularity (both 4%, up from 3% in 2018).”

“Users of managed investments do not limit themselves to one single managed product, typically holding at least two. However, cannibalisation between managed investments is limited, as investors most often finance these investments using cash or through the sale of direct equities – not by reducing their holdings in other investments,” explained Choi.

Sustainable investments are a priority

Responsible investing is gaining traction as more Australians seek to align their ethical, environmental, social and corporate governance (ESG) principles with the investments they hold.

Currently, three in ten investors say they consider ESG factors when selecting (or avoiding) certain investments. A further 14% intend to start doing so in the future, and 19% are interested to learn more.

“There is strong appetite for investments that demonstrate good ESG standards among Australians young and old. Older, wealthier investors place greater importance in good corporate governance standards when selecting investments, while the younger generation are more likely to be attracted to companies that demonstrate ethical, social and environmental values,” said Choi.

“While more ESG-centric products are being launched at pace, it is important for providers to understand that the priorities of Australians are highly nuanced across the many facets of ESG. There is no one size fits all approach, and providers will do well to understand the evolving needs of the retail investing population.”

About the report

The fourteenth edition of the Investor Product Needs Report provides an in-depth study of Australian investors’ investing behaviour and their use of investment products such as direct equities, ETFs, LICs and managed funds. This report is based on a large-scale survey of 7,933 Australian investors concluded in September 2019.

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King Loong Choi

Investment Trends has released its 2018 Financial Advice Report, an in-depth survey of the appetite and use of financial advice among Australian adults.

The report, now in its eleventh year, draws on the responses of 7,639 Australian adults that was concluded in September 2018. This year’s study highlights a number of important trends:

1. The Royal Commission has profoundly impacted perceptions of the financial planning industry

Everyday Australians have been paying attention to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The latest research from Investment Trends shows that two-thirds of Australians are aware of the inquiry, including a quarter who say they have been keeping a close eye on the proceedings.

“So far, the general sentiment has not been positive,” said King Loong Choi, Senior Analyst at Investment Trends. “More than 40% of Australians do not believe that the financial services and banking industry has met its obligations to everyday Australians, while half reject the notion that the industry has been treated unfairly in the media,” added Choi.

2. Trust in financial planners and banks are at all-time lows

Each year, we ask Australians to rate their level of trust (from a scale of 0 to 10) in 11 different professions and financial services sectors, ranging from accountants to super funds to their friends/family. Unsurprisingly, Australians trust their friends/family the most (average score of 7.0) while politicians sit at the other end of the spectrum (3.0).

But in the last 12 months, trust levels have fallen most severely for banks and financial planners to below five out of 10, and into the “distrusted” range. Banks fell from a trust rating of 5.5 to 4.8, while financial planners fell from 5.1 to 4.8.

“The trust impact of the Royal Commission is real, and the financial advice industry must take proactive measures to rebuild trust among the wider population,” said Choi. “One of the most important steps involves lifting transparency in every single aspect of the advice process.”

The majority of Australians who use a financial planner are satisfied with the service they receive, but they are now vastly less willing to recommend it

Even within the context of the Royal Commission’s hearings, the satisfaction levels of Australians who use a financial planner only fell from 81% to 74%. While this is relatively good news for the planning industry, the willingness of these same Australians to recommend their financial planner, as measured by the Net Promoter Score, fell precipitously into negative territory.

3. Despite headwinds, there is significant demand for advice nationwide

Though confidence in the advice industry has been dented, there is a strong and growing demand for advice among Australians. In the next two years, an estimated 2.1 million adults intend to turn to a financial planner for advice, up from 1.6 million in 2017.

“For Australians, the top barriers to seeking financial advice involves not having the time to find an adviser, perceptions of high fees and perceptions of insufficient wealth,” said Choi. “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.”

“Raising Australians’ understanding of the value of advice is vital since many Australians only seek and receive advice when they approach retirement, when in reality they need advice earlier in the accumulation phase,” explained Choi.

About the report

The results are drawn from the Investment Trends 2018 Financial Advice Report, released to Investment Trends’ clients in September. This report was based on a survey of 7,639 Australian adults, conducted in September 2018.

Key highlights:

• The Royal Commission has profoundly impacted perceptions of the financial planning industry
• Trust in financial planners and banks are at all-time lows
• The majority of Australians who use a financial planner are satisfied with the service they receive, but they are now vastly less willing to recommend it
• Despite headwinds, there is significant demand for advice nationwide

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