Cost of Financial Advice and Client Retention Challenges Revealed

0

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Additionally, 36% of clients opted out to independently manage their finances, while 29% felt they had acquired sufficient knowledge from their advisers. Quality and value concerns prompted 17% and 14% of clients, respectively, to sever ties with their advisers.

Netwealth’s study classifies clients into three categories based on their engagement duration: “newcomers” (less than three years), “settled” (three to five years), and “loyals” (over six years). Findings highlight that perceptions of value improve over time, with newcomer's rating value at 7.2 out of 10, increasing to 7.8 for settled clients and 8.2 for loyals.

A notable aspect of the research is the discrepancy between perceived and actual financial literacy levels among clients. Despite 43% of “loyals” claiming high financial literacy, evaluations reveal only 2% possess advanced understanding. Similarly, 50% of “settled” clients overestimate their knowledge, with a mere 2% achieving high literacy scores.

This disparity persists among “newcomers,” where 57% rate their literacy as moderate, contrary to findings showing 79% lack basic financial acumen. The study underscores a significant gap between self-assessed and actual financial knowledge across all client categories.

Interestingly, these insights from Netwealth contrast the Financial Advice Association’s last Value of Advice Index. The latter highlighted that nine out of ten clients valued the benefits they received as outweighing advisory costs, with an improvement in client quality of life and financial confidence reported.

The evolving perception of value and financial literacy challenges suggests the need for advisers to integrate educational components into their services to enhance client satisfaction and retention.

With financial self-sufficiency increasingly prioritized by clients, financial advisers may need to reassess their engagement strategies and emphasize tangible benefits to ensure long-term client loyalty.

Published:Thursday, 27th Mar 2025
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Finance News

Clear

Commonwealth Bank's Business Lending Reaches New Heights

18 Feb 2026: Paige Estritori

The Commonwealth Bank of Australia (CBA) has reported a significant 12% increase in its business lending portfolio, reaching $168 billion by December 2025. This growth underscores the bank's commitment to supporting Australian businesses and reflects a broader economic confidence among enterprises. - read more

Reserve Bank's Rate Hike: Implications for Australian SMEs

18 Feb 2026: Paige Estritori

The Reserve Bank of Australia (RBA) has raised the official cash rate by 0.25 percentage points to 3.85%, marking the first increase in over two years. This decision, driven by persistent inflationary pressures, has significant implications for small and medium-sized enterprises (SMEs) across the country. - read more

APRA's New Debt-to-Income Limits: What Borrowers Need to Know

18 Feb 2026: Paige Estritori

The Australian Prudential Regulation Authority (APRA) has announced the implementation of a new policy aimed at mitigating financial risks associated with high debt-to-income (DTI) home loans. Effective from 1 February 2026, authorised deposit-taking institutions (ADIs) are required to limit the issuance of new mortgage loans with DTI ratios of six times or more to no more than 20% of their total new lending. - read more

Renown Lending Boosts SME Funding Pool to $400 Million

10 Feb 2026: Paige Estritori

In a significant move to bolster support for small and medium-sized enterprises (SMEs) across Australia, Renown Lending has announced an expansion of its funding pool from $250 million to $400 million. This substantial increase aims to provide fast and flexible financing solutions to businesses nationwide, addressing the growing demand for accessible funding options. - read more

Westpac's Bold Move to Strengthen Business Lending

02 Feb 2026: Paige Estritori

In a significant strategic shift, Westpac Banking Corporation is intensifying its focus on business lending by restructuring its branch operations and investing heavily in digital platforms. This move aims to enhance support for small and medium-sized enterprises (SMEs) across Australia. - read more

AFCA Cautions SMEs on Unregulated Lending Practices

02 Feb 2026: Paige Estritori

The Australian Financial Complaints Authority (AFCA) has issued a cautionary advisory to small businesses regarding the potential risks associated with engaging lenders who are not members of AFCA. This warning comes in response to a noticeable increase in complaints from SMEs about lenders operating outside the regulatory framework. - read more

SMEs Seek Financing Solutions Ahead of ATO Debt Rule Changes

02 Feb 2026: Paige Estritori

Australian small and medium-sized enterprises (SMEs) are proactively seeking financing solutions in response to impending changes in Australian Taxation Office (ATO) debt regulations. Effective July 1, general interest charges (GIC) and shortfall interest charges (SIC) on tax debts will no longer be tax-deductible, prompting a significant uptick in loan inquiries from businesses aiming to manage their tax obligations efficiently. - read more

Click for more Finance News