Are employers the next frontier for advisers?

The majority (63%) of Australians under 40 are open to financial advice delivered through digital channels and hybrid models – and employers may be the quickest route to accessing these customers. 

Per the The Big Lift report, developed by Deloitte Access Economics in collaboration with Iress, "there is a disconnect between the way financial advice is currently provided and the cohorts it reaches." However, embedding advice in "familiar channels" such as employers and financial institutions will enable advisers to proactively – and profitably – engage underserved segments.

In order to do this, though, advice businesses will need to explore alternative, simplified offerings. According to the report, this could include employer-subsidised financial education and targeted coaching for different life-stage segments. 

The Big Lift encourages advisers to focus on "expanding, not defending," arguing that employer partnerships would be mutually beneficial – for advisers, they provide access to large and diverse client cohorts. And employers would reap the benefits of increased employee productivity; the research notes that increasing the financial capability of Australian employees to advanced levels "could reflect a $67 billion benefit for Australian businesses."

More broadly, The Big Lift suggests that if all Australians were to uplift their financial capability to an advanced level, it would equate to a $122,950 increase in average household wealth – or $1.2 trillion nationally. And people with high financial capability are "twice as likely to seek out financial advice." 

It's worth noting that financial capability isn't synonymous with financial literacy – not directly, anyway. According to the report, financial capability is a "complex and multifaceted concept that lacks a standardised definition, making it challenging to measure across time and populations." 

For this reason, The Big Lift uses a "bespoke financial capability index" which comprises both financial literacy and "financial behaviours" such as saving, borrowing, proactive engagement with financial advice and wealth building.

Applying this model to HILDA data, the report found that 59% of Australians have a low financial capability. And lower financial capability levels are associated with "mismanagement of assets, [limited] wealth-building potential ... and stress and anxiety." As implied above, people with lower financial capability are also substantially less likely to seek advice.

So: what role do advisers play in elevating financial capability in Australia? And what's the underlying opportunity for advice businesses who take part in this project?