New research has shown people are turning to friends and family for financial advice, rather than professionals.
According to Roy Morgan, 3.5 million Australians are asked for financial advice by friends and family.
The figures show that six million people will turn to these ‘trusted financial advisors’, before making financial and banking decisions.
The Roy Morgan Single Source survey also looked further into which kinds of people were being asked for advice.
One of the takeaways from the research was that bank customers who were asked for advice had the potential to help their bank gain or lose customers, depending on own their satisfaction.
Of the sixteen largest consumer banks, Citibank had the highest proportion of customers who were asked by friends or family for their financial advice at 34.5% of customers. This was followed by ME Bank which had 32.2% of customers who were asked for financial advice.
The highest proportion of the big four banks customers who are asked for advice was ANZ with 21.2%, followed by NAB at 20.4%, then Westpac at 19.5% and CBA at 17.9%.
Norman Morris, industry communications director, said, “This research shows that financial decisions for many have the potential to be impacted to a considerable extent by informal advice from friends and family, rather than relying on professional financial planners.
“With three and a half million people being asked by family and friends for financial advice and six million asking them for advice, this network is likely to play a major role in financial decisions.
“The banks dealt with by the people who give advice have the potential to gain customers provided they have high satisfaction and as a result are more likely to be advocates for their bank.
“It is therefore worth banks understanding and tracking that important group of their customers, the ‘trusted advisors’.”
Looking at what type of customers were being asked for advice, Roy Morgan discovered they were above average in terms of wealth, income and education. Thirty-six percent of those who were asked for advice were in the top 10% in terms of the value of their banking and finance products.
Morris explained further, “The data used here also shows that not only are these trusted financial advisors a generally wealthier and experienced group, but they have many other differences to the general population, covering media, technology, activities and attitudes.
“The full database enables a truly holistic and unique understanding of all aspects of consumer financial behaviour, including a detailed profile of trusted financial advisors.
“Data has been gathered from over one million interviews across two decades and as a result provides valuable insights into long term trends.”