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10-284AD ASIC releases access to financial advice report
ASIC today released a findings report on Access to financial advice in Australia ( REP 224).
Improving access to advice helps consumers get the advice they need when they need it. It may consist of personal advice, general advice or access to factual information. It also enables industry to innovate so it can provide high quality advice services as efficiently as possible to consumers.
Between 2009 and 2010, ASIC conducted research into the demand and supply of financial advice in Australia. The report summarises the findings, identifies current gaps in the advice market and highlights some of the actions ASIC and the industry have undertaken to improve access to advice.
The report identifies a number of issues that adversely impact access to advice:
- Cost of advice: A significant gap exists between what consumers are prepared to pay for financial advice and how much it costs industry to provide advice.
- Scale of advice provided: Many Australians, particularly those who have never previously accessed financial advice, want piece-by-piece simple advice rather than holistic advice. Many advice providers still provide holistic advice as the default option.
- Consumer perceptions that advice is out of their reach: Evidence suggests some people do not seek financial advice because they feel their financial circumstances do not warrant advice.
- Consumer mistrust of financial planners: A lack of trust in financial planners to provide unbiased, professional advice limits the number of consumers who seek advice and the value they place on financial advice.
- Access to general advice and information: The provision of general advice or factual information is less extensive than it could and should be. For many consumers general advice and factual information may be sufficient to meet their current advice needs.
- Financial literacy: Gaps in financial literacy, especially among certain demographics and in relation to certain financial topics, limits some consumers’ engagement with financial matters and so stops them from seeking advice.
These issues present significant challenges to industry, ASIC, Government and consumer groups. The need for improved access to financial advice has been recognised by the Australian Government, ASIC, industry and consumer groups alike. Through its Future of Financial Advice reforms, the Government is currently actively exploring ways to improve access to financial advice.