Gen Y’s satisfaction with financial advice surges as advice index hits high: Lifeplan

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Investors aged under 30 have shown a surge in satisfaction with their financial advisers, beating the satisfaction levels of all other age groups, according to the April 2015 survey results of the Lifeplan ICFS Financial Advice Satisfaction index*.

In previous surveys, an investor’s age was positively correlated to the three drivers of advocacy: performance, trust and reliability, and technical ability of their financial adviser – i.e. the older the investor, the more likely they were to be satisfied with their adviser. However, over the past two surveys, the youngest cohort of investors has displayed rapid increase in their perceptions regarding their advisers.

This group now sits second to the over-60s age group in terms of their perceptions for all three drivers of advocacy. As in previous surveys, older investors have significantly higher levels of perceptions regarding their advisers, although this survey saw their perceptions regarding their adviser’s technical abilities decrease.

Higher wealth levels have also been correlated with more positive perceptions across the three drivers of advocacy in previous surveys; however this survey shows that investors with the highest net wealth record a decrease in perceptions for Technical Abilities and Trust and Reliability.

Investors with lower net wealth seem to show an increase in their perceptions across the three drivers and investors with less than $50,000 seem to be most positive regarding their advisers.

“This survey sees a very strong increase in the levels of advocacy by the lowest net worth and younger investors. This result may indicate that financial advisers are doing a good job of taking care of entry level investors,” said Mr Matt Walsh, head of Lifeplan.

Market factors may also explain the high levels of advocacy among investors in this survey. Notably, the equity market index ASX 200 showed gains for much of the period since the last survey. During this time investors have seen high returns on their equity and real estate investments although the lower interest rates have impacted the fixed income markets severely.

“In light of favourable capital market conditions for equities and property over the past six months, investors with a bias towards risk have benefited and this may help explain an increase in the perception regarding performance,” Mr Walsh said.

“On the other hand, as yields decrease term deposits and other annuities are impacted negatively.  Perhaps as a result of this, perceptions of investors in the 60-plus age group showed a drop in their advocacy of their advisers.

“As global equity markets rise and yields decrease, advisers need to be cautious about future changes in the capital markets. If the domestic economy slows down, advisers will need to be careful regarding how portfolios may need to be adjusted. If the equity market, real estate and fixed income securities start providing low or negative returns, investors will become more critical of their advisers.

“In particular, it is concerning that investors in the 45-60 age-group seem most dissatisfied with their adviser, as this is the group we believe most advisers are concentrating on as a way of growing their business.  Our view is that more needs to be done to keep them happy,” Mr Walsh said.

Although young investors and those with less than $50,000 showed the biggest satisfaction increase, across the board this survey showed an increase in the satisfaction all investors have with their financial advisers. All three drivers of advocacy are now at their highest levels since the index commenced.

The index increased to 75.12 and has achieved the highest level of satisfaction since its inception. Year on year, the April 2015 survey saw an increase of 0.8 percent over the April 2014 index levels.

The largest increase amongst the three drivers of advocacy was for the perception of Performance that increased by almost 1.24 percent over the last survey six months ago, while the other drivers – the perception of Trust and Reliability increased by 0.81 percent while the perception of Technical Abilities of the advisers increased by 0.17 percent over the last six months.

“It is clear that generations Y and generations X will increasingly account for a larger part of a financial adviser’s client base. These survey results underline the importance of ensuring advisers meet the needs of all their clients, and not just the about-to-retire and newly-retired baby boomer generation.

“Gen X and Gen Y will eventually be the recipients of huge levels of intergenerational wealth transfer, so ensuring advisers provide these investors with good advice now, will stand them in good stead when these younger clients have even larger amounts to invest.

“The increased satisfaction levels of younger investors, and of those with smaller amounts to invest, would suggest that this is the case,” Mr Walsh concluded.

Lifeplan Funds Management is a specialist business of Australian Unity Investments. It is a market leader in investment and funeral bonds, and a leading provider of education investment funds.

* The survey of 409 investors who use financial advisers was undertaken in March by the University of Adelaide’s International Centre for Financial Services (ICFS) for Lifeplan, and sought feedback about the performance, trust and reliability, and technical ability of their financial adviser.


 For more information please contact:

Matt Walsh
Head of Lifeplan
Phone: 08 8236 4706