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Research shows benefit of advice

New research from the Financial Markets Authority has highlighted the value financial advisers bring to their clients.

Wednesday, April 5th 2017, 6:00AM

by Susan Edmunds

The FMA commissioned a Colmar Brunton survey of New Zealanders aged between 60 and 74 to find out how advice had helped them manage their savings.

It also worked with the IFA, which distributed a questionnaire to its practitioner members to send to adviser clients, to get a snapshot of their experience.

The research found that, of those retirees who had sought professional financial advice, 95% said their adviser was either good, very good or extremely good value. About 30% said their adviser was very good value.

Almost 90% said there was nothing they would like their adviser to do differently.

While having done their own research or talking to a product provider was also likely to make them more confident, retirees were more likely to have a portfolio of shares, bonds and managed funds when they dealt with an adviser. 

"It's not to say you won't get there if you don't have an adviser, it's just more likely that you will," said Paul Gregory, the FMA's director of external communications and investor capability. "But this showed some people were quite evangelical about what the value of good advice is."

The wider survey found less than 30% of respondents had seen a professional.

Gregory said the FMA was concerned about a lack of access to advice, and that it was limited to those with substantial sums of money to invest.

Advisers' clients said they had sought help because they received a lump sum. Most had at least $100,000 to invest but almost half had at least $450,000. Advisers told the FMA that it was not viable to deal with retirees with less than $100,000.

The clients wanted their advisers to give them guidance on getting better returns.  They said establishing trust was crucial - those who had were less worried about volatility and more likely to take risk. They also valued the ongoing communication they got from their adviser about their progress towards goals, and their ability to explain concepts to them.

More than 90% of advice clients said they had made better decisions because they had had advice.

But advisers told the FMA that they struck problems because clients wanted to invest conservatively and did not understand inflation risk, or that they were likely to have to cover 25 years in retirement. 

Survey respondents said they would be more inclined to use an adviser if they gave a clear list of the services on offer, and details of their fees up front.

 

 

 

Tags: financial advisers

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