As we’ve discussed recently, the need for financial advice has become increasingly apparent in the era of COVID-19 – to the extent that ASIC is now consulting on ways to increase its availability to consumers.
Given the majority of people’s historical aversion to seeking advice, though, you might be wondering how much of this is manifesting in actual demand. According to Integra adviser Deborah Kent, there has definitely been an “upsurge in consumers seeking advice where they may not have previously, to ensure that they are in a good place financially and also prepared for their future something that they may have put off in the past.”
Deborah believes this is because COVID-19 has compelled people to “rethink what is valuable to them such as family, friendships, the environment, how they live and work and especially how they spend their money and what their future looks like.”
On a more practical level, Deborah also thinks the present situation has caused a shift in the traditional approach to how Australians build their wealth. She explains: “Investors traditionally have had a love affair with Australian equities and franked dividends, especially in retirement.”
“Low interest rates have seen more investors jump into the market seeking higher returns,” she continues, “but given that the recovery after COVID-19 will take time, investors will need to review portfolios to ensure that they have enough diversification across markets and also take on a growth mindset. We have already seen companies cut or reduce dividends, so retirees cannot solely rely on them in the future.”
Deborah thinks advisers will likely be at the vanguard of educating clients on these new realities, noting that “Australians who seek financial advice are in a better place financially for their future.”
The problem, of course, is highlighted at the outset of this piece: so many Australians aren’t getting financial advice and reaping these benefits. So how does that change? According to Deborah, part of the issue is affordability.
“Over time regulations have increased the cost for advice to consumers,” she says. “The need for Australians to access advice has not changed even with an epidemic. To change this, reforms are potentially necessary in areas such as making SOAs more simple, short and efficient to produce; rationalising FDS and opt-in; and regulations around providing scaled or one-off pieces of advice to clients.
“These measures would greatly assist in the affordability of advice.”
Deborah Kent is featured in the latest season of Secrets of the Money Masters, where she appears on a panel with Vanessa Stoykov and UBS Asset Management’s Bryce Doherty.
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