More than 70 per cent of advisers say the advice gap has expanded in the past five years, according to research from Intelliflo.
The advice gap, one of the most persistent consequences of the Retail Distribution Review, represents the gap between those who get financial advice and those who want it.
According to Intelliflo's 2022 Advisory Business Impact poll, 73 per cent of advisers believe the gap expanded over the past five years, and more than half thought it was “a lot wider.” About two thirds (62 per cent) thought it grew even more during the pandemic.
Intelliflo had polled 147 advisers in early October and found although more people were seeking advice in the past 12 months, the profile of those reaching out did not seem to have changed.
Most advisers (84 per cent) said they hadn't noticed a shift in the ethnic background, income level (80 per cent), or the number of women (89 per cent) onboarded as clients.
Nick Eatock, CEO of Intelliflo, said advisers should consider greater use of technology to save on costs, which firms can then pass on to clients through lower fees.
"Many advisers are prevented from helping a wider range of clients due to a lack of time and resources.
"So how can our sector increase access to financial advice, particularly households coping with financial distress? We firmly believe that adopting technology to its best effect will make it possible for the sector to reach thousands more clients and make advice more affordable and accessible," he said.
From the adviser perspective, Intelliflo’s poll found that firms felt they were prevented from reaching out to more people that don’t typically access advice for a number of reasons:
- The cost of servicing these clients is too high (46 per cent)
- They lack the time to service more clients (34 per cent)
- The added compliance burden (32 per cent)
Despite this, many advice firms were found to have taken steps in the right direction.
Over the last 12 months, more than two-fifths (43 per cent) had hired junior advisers to take on some lower income clients, and the same number had taken on lower income clients as wealth in waiting.
Nearly all financial advisers surveyed (95 per cent) believed technology was crucial to bridging the advice gap and reaching those who don’t typically access advice.
Adam Walkom, co-founder at Permanent Wealth Partners, said technology could help close the advice gap but it was not the right solution for everyone.
"The simple fact is the cost of giving personalised advice is high. There is no escaping that. So how do we get that down? There is an inherent tension there that is very hard to solve.
"The problem is the more technology-based and low-touch the advice, the less personalised it also tends to become.
"For some people that will be fine and there is probably a business there for anyone who can make it work, but for other people it's not as they need specific help."
Drawing a parallel to the legal system, he added: "Are there mass-market law firms out there trying to bridge the advice gap in the legal system? Not that I'm aware of, because, like financial planning, each person needs specific advice. And even if there was, would you really use them?
