Financial Advisors Edged Out As More Australian Investors Turn To Media - Survey

Vanessa Doctor

3 February 2014

When it comes to making investment decisions, Australian investors turn to media commentators instead of financial advisors, at least according to the latest survey by .

In the newly-released Australian Retail Investor Survey for 2013, which gathered responses from 600 investors, only 10 per cent said they actually listened to their advisors before they made investment decisions. This is down from the already-low 17 per cent in 2012. GSAM called this "alarmingly low."

The drop is despite the market holding a more optimistic view of the Australian economy, with more than a third expecting a 10 per cent return or higher over the next three years, compared to just 19 per cent in 2012. Thirty-four per cent of the respondents said they prefer to rely on themselves to make decisions, while 32 per cent said they relied on tips from media experts and commentators. The latter is up from 25 per cent in 2012.

Ironically, 41 per cent of the investors polled said that they do have a financial advisor. Given this statistic, it appears there is a huge engagement gap between the advice providers and their clients. Ninety per cent of retail investors said that when it comes to asset classes they did not understand, they will either be very uncomfortable getting in or not engage in them at all.

"This is particularly concerning given the clear signal from investors that their knowledge and understanding of certain asset classes could be improved. There is a real need and opportunity for advisors to engage with retail investors to help them better understand risk and diversification," said Jessica Jones, managing director and head of third party distribution at GSAM.

"I don't think this marks the end of professional advice. There is still a huge opportunity for advisors to be given the tools and knowledge of how to attract people back to advice," added Jones.