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Coronavirus fears ‘raise demand for financial advice’

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Concerns over the economic impact of the virus-induced recession will see more Australians engaging with financial advisers over the next two years, according to research house Investment Trends.

About 44% of respondents of 4501 adults surveyed in July say the present situation has increased the likelihood of them seeking professional advice on financial matters.

Based on the findings, this translates to some 2.6 million Australians who are potentially keen to pay for financial advice. In 2019, about 2.1 million adults expressed similar interest and 1.3 million did so in 2015.

Investment Trends analyst Calvin Yap says he is not surprised by the survey results.

“Because of this uncertainty, it actually magnifies the appetite for financial advice,” he told insuranceNEWS.com.au. “We think COVID is like an accelerator.

“Even pre-COVID, Australians with unmet advice needs have been trending up.”

However, cost could be a deciding factor on the type of advice consumers will end up with. About 76% of potential clients prefer comprehensive advice, but when cost is factored in there was a marked increase in preference for limited advice.

Planners charge around $2800 for a statement of advice and the fees could be higher depending on what clients are after.

“Still, there are opportunities to transition those who want limited advice to a holistic advice offering, since the vast majority of potential clients are open to upgrading to comprehensive advice over time,” Investment Trends Senior Analyst King Loong Choi said.

The survey also found the recent lockdowns across Australia have caused greater engagement between financial planners and existing clients.

About 49% of planners made first contact with clients to discuss the financial impact of the pandemic, and they received higher client satisfaction score of 73% compared to 56% for those who did not reach out.

“As the lockdowns persist, all planners must take the opportunity to engage more closely with their clients,” Mr Choi said.