Roy Keenan from Yarra Capital Management shares insights with James Dunn from The Inside Network on the role of active management. The Inside Adviser
After the Hayne Royal Commission many advisers decided to steer away from large dealer groups in favour of becoming self-licensed. In the last six months, however, that trend has taken an abrupt turn.
Number of wealthy investors not seeking advice ‘persistently’ high
There may be more high-net-worth (HNW) investors in the country than there were a year ago, but the cohort opting to pay for financial advice “remains persistently high” according to Praemium.
The platform provider again sponsored this year’s iteration of the Investment Trends High Net Worth Investor report, which showed that the number of Australians with investible assets over $1 million increase by 10,000 in the past year – from 625,000 to 635,000 – yet the percentage not receiving financial advice climbed from 60 per cent to 65 per cent.
The results are a likely representation of the market forces affecting the financial advice industry, with the contracting adviser workforce – which has shrunk ~40 per cent since 2018 – not able to service as many financial advice clients as it has done in the past.
The cost to serve for advisers has also risen significantly in recent years due to several factors including higher salary costs, higher professional indemnity premiums and an increasing adviser levy, which has forced advisers to focus on a smaller cohort of higher paying clients.
According to Praemium, the reluctance of HNWs to pay for financial advice doesn’t mean they don’t recognise its value.
“Despite a reticence to seek guidance, HNWs acknowledge a need for advice with inheritance and estate planning, intergenerational advice, and aged care ranking,” the platform provider stated. “The need for advice in these areas is now at its highest in the three years Praemium has been sponsoring this research.”
Despite the increase in HNWs not paying for advice, the perception that financial advice costs too much fell from 32 per cent of respondents to 22 per cent this year. Among the three reasons HNWs didn’t obtain financial advice, the three most common were:
- Prefer to seek advice only when I need it
- Can manage my own financial affairs, and
- Lack of confidence in advisers’ expertise
Praemium CEO Anthony Wamstecker said the development could push advisers to change their service offering so it aligns moreso with client needs.
“There remains demand for several key advice areas among HNWs – including inheritance and estate planning, strategies to reduce tax, portfolio review, retirement planning and intergenerational advice – but challenges and opportunities remain for advisers, and others in the financial advice industry, to offer services tailored to what investors want,” he said.
