Almost a third of consumers and half of small business owners are considering either changing their current financial planner or ceasing to use one altogether, according to new research.
Respondents to the MetLife Adviser-Client Relationship Report 2019 cited high fees, lack of affordability and “no ongoing need” as the main reasons for considering a change to their planner arrangements.
They also cited “lack of contact” as an issue. Jeff Scott, MetLife Australia head of advice strategy, says: “Annual reviews give clients the opportunity to have their questions answered by advisers and to seek reassurance that the advice and financial products they are receiving are best suited to their needs at that point in their lives.”
Among those consumers who undertook a review in the last 12 months, 63 per cent rated the experience “very good” or “excellent”. Those people are more likely to recommend their adviser than those who do not have annual reviews.
Half of the people looking for new adviser say they would prefer to use an independent adviser.
SME owners showed a preference for fees over commissions for insurance advice. Thirty-five per cent say they are less likely to trust an adviser who is paid a commission.
Seventy-eight per cent say they would prefer to pay an upfront fee for service for advice. When asked what they would be prepared to pay for insurance advice the average amount was $1700.
Scott says: “This much lower than the average cost to produce comprehensive insurance advice and indicates that significant education is required to help clients frame a realistic expectation around the value of the services advisers are providing.”
Thirty-nine per cent of consumers who have life insurance through an adviser say they initiated discussions in order to “protect their family” or saw an adviser following a recommendation from a family member or friend.
Close to half of consumers with life insurance say they are concerned about whether the insurance company would pay out in the event of a claim, despite ASIC data that shows payout rates are high.
Among “consumer potentials”, who say they are likely to see an adviser over the next couple of years, 25 per cent say cost is a barrier. In the 2018 survey, 18 per cent cited cost as a barrier.
The report is based on a survey of 797 consumers and 213 small business owners who have used a financial planner and 288 “consumer potentials”.