Advice Propensity
Discover what Advice Propensity is and how it can help firms better target and engage with prospective clients who are more likely to seek advice.
What is Advice Propensity - a definition
Advice Propensity is a measure of The Advisable Australian's likelihood to seek or use financial advice services. It encompasses an individual’s openness to using advice, taking into consideration their understanding of what financial advice is and their perceptions, sentiment, and barriers, or lack thereof to seeking financial advice. It also considers their latent need for advice, driven by the individual’s life circumstances.
Those Advisable Australians that are more likely to seek advice typically have wealth needs, an appreciation of what advice can offer them, a belief that advisers can do it better than they can, trust in a person or organisation and comfort that they can afford it.
Advice Propensity thus increases with:
1. Clarity on an individual’s personal and household financial goals
Which of the following financial goals are you actively working towards in the next three years?
2. An understanding of the role and benefits advice can deliver them
Would you consider receiving financial advice from a financial planner if you have a better understanding of what they could do for you?
3. A belief that a wealth professional can service their needs better than they can themselves
What are the key reasons you are not currently using or seeking financial advice from a financial planner?
4. A positive feeling about affordability and trust in the person and organisation they hope to receive advice from.
If I found one I could trust, I would start/restart receiving financial advice from a financial planner sooner...
The Advisable Australian - A new way to think about investors
To learn what financial advice firms can do to target and market to those more likely to seek advice, download our special report, The Advisable Australian Volume 1 - A new way to think about Australian investors.
How Advice Propensity affects Australians
The benefits of receiving advice are well-documented, which are reinforced by our research. We found that those who receive advice are less likely to have financial issues impact their mental health (39.1% versus 51.0% of unadvised individuals), family life (35.7% versus 48.2% unadvised individuals) and social life (33.1% versus 45.5% unadvised individuals).
It matters to advice firms as it helps them identify and find future prospective clients.
Understanding the Advice Propensity groups in Australia
The Advisable Australian universe falls into four naturally occurring Advice Propensity groups, split evenly among the population (excluding individuals who would never seek financial advice).
Those that are ‘likely’ or ‘possible’ to receive financial advice are the most attractive future market for planners. Combined, they consist of 4.28 million Australians and the value of their total household wealth is estimated to be $4.4 trillion, whilst their total debt is $0.73 trillion (where total household wealth is made up of total household investment portfolio, total household superannuation plus the value of residential property; and total household debt includes mortgages, personal loans, credit cards and other debts).
Forty percent of those ‘likely’ to seek advice claim they are realistically going to start or restart receiving financial advice in the next 12 months, with a further 28.0 per cent of this group likely to receive advice in the next 3 years. For the ‘possible’ group, almost 40 per cent are looking to start/restart receiving financial advice in the next 3 years and a further 30.7 per cent in the next 5 years.
How advisers can use our three Advice Propensity models to target and engage clients
For advice businesses looking to grow their business in the next three to five years, by understanding the Advice Propensity dimension advice firms can better articulate and market to their future prospective client base.
To learn what financial advice firms can do to target and market to those more likely to seek advice, download our special report, The Advisable Australian Volume 1 - A new way to think about Australian investors.
Explore the other dimensions of the Advisable Australian
The Emerging Affluent - The fight for the future market
Discover the Emerging Affluent, the next generation critical future market, and how to target them. Download our special report, The Advisable Australian Volume 2 – The fight for the future market: The Emerging Affluent.