A need for financial guidance

EVERY half year since June 1997, the Financial Planning Association (FPA) has commissioned Roy Morgan Research to monitor financial planning guidance. The latest tracking study was done between September 9 and 10 last year.

Nationally, 1000 respondents were surveyed to determine:

p who consumers would approach for financial guidance should they need it;

p the level of awareness of the types of services offered by financial planners;

p who consumers have approached for financial guidance if it has been needed; and

p the awareness level of the term “Certified Financial Planner”.

Breaking these down into component questions revealed the following.

What proportion of Australians have obtained financial guidance?

A total of 51.6 per cent of Australians have obtained financial guidance. This has not changed significantly since the last survey was done. This is disappointing, given that the complexity of financial markets and products has been increasing exponentially. In this uncertain environment it might have been suggested that Aust-ralians would seek advice from other parties.

Who did they obtain guidance from?

Since August 1998, financial planners/ advisers have dominated the provision of financial guidance.

In September 2000, 43.8 per cent of respondents obtained advice from financial planners/advisers. This is an increase of 7.7 per cent since February 2000.

Other groups, such as accountants, family and managers at banks, building societies or credit unions were approached by less than 25 per cent of the respondents.

Who were the most likely to seek advice from financial planners/advisers?

They appear to have the following charac-teristics – aged 35 or over; respondents who were separated, aged 35 plus and single with or without children and those aged 35 plus and married without children; highest socio-economic (AB); respondents with income of $40,000 or more

Who would Australians approach for financial guidance if required?

The leading intended source of financial guidance remains financial planners. Interestingly, though, only 31.3 per cent of respondents would consider approaching a financial planner.

Almost 30 per cent of respondents would still rely on a family member, 21 per cent of respondents would see their accountant and 19.3 per cent would approach their bank manager. The bank manager’s popularity appears to be on the wane. Given the scarcity of local branches and the impossi-bility of actually interacting with human staff these days this is probably not surprising.

What services do financial planners provide?

All of the work that the FPA have done in the past few years to raise the profile of financial planning as a profession appears to have paid off. A total of 77 per cent of the respondents was aware of the services pro-vided by financial planners.

What proportion of Australians were aware of the term “Certified Financial Planner (CFP)”?

Since February 2000, approximately 56 per cent of respondents were aware of the term CFP.

The understanding of the term was a little less definitive with the understanding ranging from “Is the most experienced Financial Planner (15 per cent) through to “Is a type of licence” (12 per cent).

Perhaps this suggests to the FPA that they still have some work to do in regard to the promotion of the concept of a Certified Financial Planner.

The interesting aspects to take out of this survey is that there is still a fairly large group of us out here relying on family members to provide advice in an area of our lives that has become so specialised that a whole profession has evolved.

The role of the bank manager and accountant in this area does appear to be very much diminished.

The accountants are fighting back and have recently developed specialist desig-nations in the area of financial planning and also are holding a range of training programs so as to get them ready to approach their own client base to provide financial planning advice.

It is an indictment of that industry that the trusted accountant, who already had the client completely catered for, allowed them to slip through their hands into those of a new profession.

The nature of the people approaching financial planners did not provide a surprise. Those in the highest socio-economic group were generally the ones who were aware of the services provided by financial planners. In many ways, the whole Robert Kiyosaki concept of “Rich Dad, Poor Dad” could well be borne out in this fact.

This also may have as much to do with the pricing of the financial planners’ services.

The survey provides valuable insight into the way we approach the concept of financial advice and the need for guidance. It also provides valuable material to planners as to what they need to do to try and win the trust of our consumers.

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