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Helping those that need it most By David Smith on Jan 6, 2023

Providing estate management concept

In a recently published survey conducted in the US by research house Greenwald Research on behalf of Edelman Financial Engines, there were some interesting insights regarding consumer attitudes to financial advice. I suspect that the results in Australia would be very similar. The survey sampled “affluent” Americans defined as being 45 to 70 with household investable assets of between US$500,000 to US$3m.

Here are some interesting results:

  • 63% said they have made financial decisions based on emotions. Of those that did, 35% said they regretted it.
  • 40% of those with adult children are supporting them financially.
  • 47% said that managing their money to minimise their taxes was overwhelming.
  • 60% (40% of the affluent) felt that they would be more financially secure by the age they now are.
  • 80% are making sacrifices due to inflation.
  • Unadvised need the most help in:
    • Retirement planning (27%)
    • Centrelink style benefits (22%)
    • Developing a financial plan (22%)
    • Tax guidance (21%)

A key statistic was that only 35% worked with a financial adviser. The reasons cited were:

  • Cost (38%)
  • Perceived insufficient financial assets (33%)
  • Believe financial affairs are simple enough to not require help (27%)
  • Enjoy doing it themselves (17%)

For the wealthier group, other reasons included a lack of trust in advisers and a belief they can find the information they need elsewhere.

Advisers have an impact on the amount of stress felt by respondents. 52% of the non-advised felt they were under stress in the prior 6 months compared with 39% of those receiving advice. 70% of those receiving advice reported a positive impact on their family dealing with difficult and emotional issues relating to finances.

The key challenge for accountants in Australia

The great challenge for accountants in Australia is that for many clients their accountant is seen as their principal source of help regarding everything and anything to do with their financial situation. Yet, under the current regulatory regime, without appropriate licensing, accountants are unable to provide anything that fits within the definition of “financial product advice”.

The response from many accounting firms has been to establish their own financial planning practice. This requires significant investment and time and requires scale. Despite this, many firms now have highly successful and profitable financial planning practices.

However, the problem remains that for many clients the cost of advice is perceived as too expensive, leaving a large proportion of the firm’s clients unadvised, and forced, amongst other things, to make their own investing decisions. Accountants know better than anyone how badly these usually play out.

Lower cost alternatives

Around the world, the financial services industry is grappling with this same problem – what is generally referred to as the “advice gap”. Vanguard and Exchange Traded Funds (“ETFs”) are attempts to solve this problem by providing low-cost investment products that essentially track an index. These are called passive investments in that no active management is provided.

However, they don’t provide a solution; the customer is still faced with the dilemma of which ETFs to buy (there are 200 on the ASX!), how to put them together to obtain a broadly diversified, multi-asset class portfolio, and is then managed based on changing global conditions.

It highlights that no matter what combination of instruments is used – shares, managed funds, ETFs – someone has to put them together to form a portfolio and then manage that portfolio.

Financial planning teams within accounting firms do this, but they currently do so on a one-to-one basis, pursuant to personal advice. But what if they could also offer these managed portfolios in the form of a solution to all clients of the accounting firm, without the client first having to obtain personal advice? What if such a solution could also be offered to the children of the firm’s clients, who don’t have the wealth – yet – to justify the cost of personal advice?

In Australia, provides the technology and compliance arrangements so that accounting firms can do exactly this:

  • For accounting firms with financial planning teams, this low-cost solution is accessible from the firm’s website, carries the firm’s brand, and offers the firm’s investment portfolios (usually called “model portfolios”) and content. It means that the firm can have a solution for every client; a full personal advice service for those with the means to afford it, and a lower-cost solution accessible via technology, for everyone else. The advantage is that as this second category of clients grows their wealth or they need specialist advice, they will inevitably seek that help from the firm’s advisers. At some point, they may wish to transition to a full-service advice offering. It also means the firm is helping the next generation of clients – which is crucial given the huge wave of inter-generational wealth transfer which is just beginning.
  • For accountants who do not offer an in-house financial advice service, they are able to introduce to their unadvised clients via the provision of “factual information” the OpenInvest online marketplace. This provides tools and information to aid decision-making and gives access to investment portfolios managed by tier-one global investment managers such as Blackrock, Schroders, and JPMorgan. In this way, the accountant can have confidence that their client is receiving quality information and investment solutions from the world’s most trusted investment managers.

As the US research shows, there is a significant gap between the full service financial planning advice with its associated cost and the needs of many investors. No one wants to see clients making poor investment decisions based on discussions with friends and others, and their own lack of expertise. By leveraging proven technology, accounting firms can help a much broader audience of their clients and future clients access professional portfolio management, with all of the security and assurance that comes with professional investing.

Download the OpenInvest document: A Guide to Promoting Your Digital Investing Solution Regulatory Considerations

David Smith is a non-executive director and shareholder of OpenInvest. Visit to learn more.


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