DIYers shun advice: Research

Global analytics firm Cerulli Associates found 53% of advisers’ clients internationally were aged between 50 and 70. New Zealand advisers estimate the proportion of clients in that age group may be even higher in this country.

Cerulli associate director Kenton Shirk said advisers were finding it harder to attract young investors.

"The endless availability of online resources, as well as easy-to-use direct platforms is diminishing the need for advisors within the do-it-yourself generations."

Direct product providers had lower costs and advisers could not compete on priced, Shirk said.

He said Cerulli encouraged advisers to branch out beyond offering only asset allocation and retirement advice to attract new clients.

If they could team up with tax planning professionals, they would be able to offer tax and estate advice to clients.

Adviser Murray Weatherston said he would expect about half of New Zealand financial advisers’ clients to be aged between 50 and 70, and another 20% to be over 70.

“It’s only older people who have investments – younger ones are tied up with house, mortgages and kids’ expenses.”

Jordi Garcia, of NZ Financial Planning agreed: “That would be a fair representation of my own clients and much of that I believe arises because, traditionally, many people only manage to get the mortgage, or at least a large part of it, paid off in their mid-40s to early-50s and find they have the cashflow means to then build for retirement. Until then, much of the family finances are focused on paying off the mortgage and paying for the kids. There’s often not a heck of a lot left over.”

Robert Oddy, of SiFA, said he expected the Cerulli statistics to be on the low side for New Zealand.

“I suspect the number is a higher percentage in NZ for that age group but have no definitive data. A lot of folk seem quite touchy about revealing what age band they are in.”

Comments from our readers

On 6 May 2014 at 11:31 am John Milner said:

From my experience, the average adviser has his head firmly planted in the sand with a very limited menu of services to their clients. They are acting as merely resellers of research house investment and asset allocation models as if it were their own IP. This on it's own is no crime but once the public have greater access to these models directly from the research houses there will be little need for the adviser. NZ already has too many sheep. Diversify your business as change is on the way.

On 7 May 2014 at 9:14 am Dirty Harry said:

You know, with that title I would rather see a stat showing how many investors actually use advice. The baby boomers are big-time DIYers too, or does Shirk really think the oldies are all taking advice while the youngsters are all subscribing to morningstar? How many 50-70 year olds are DIYers? How many 20-50 year olds use advisers? I would have thought Cerulli is barking up the wrong tree: Advisers are not competing for younger clients against direct product providers and "the internet". Those who can be bothered are competing against sluggish wage growth, rampant house price inflation, cost of living increases, a switch in priorities to debt repayment, an onslaught of regulation, and KiwiSaver.

DIYers shun advice: Research

There’s less need for financial advisers within the younger “do-it-yourself” generations, an international research firm says.

Tuesday, May 6th 2014, 6:00AM 2 Comments

Comments from our readers

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