As the 2016 iteration of Financial Planning Week kicks off today, two new pieces of research have been released that underline that there is a clear positive impact from seeking professional financial advice – whether it’s about feeling well prepared for retirement or realising one’s dreams.
Research from MLC demonstrates a clear link between how well prepared someone feels for retirement, and whether or not they sought professional financial advice; while research released by the Financial Planning Association (FPA) shows that advice is the “missing link to Australians realising their dreams.”
The third and final part of the MLC white paper Australia Today shows that someone who has sought advice is significantly more likely to feel well prepared for retirement than someone who has not.
The white paper reveals that while two-thirds of Australians feel unprepared for retirement, and only 15 per cent say they feel “very well” or “fairly well” prepared, those who have sought professional financial advice are three times more likely to say they feel prepared.
“We see a really clear link between those people who are prepared for retirement, and seeing an adviser,” says Greg Miller, executive general manager of wealth advice for MLC.
“We know that people who go and see an adviser are three times more prepared for retirement than those that don’t.
“Our view is the more people get informed and educated about retirement, and the more time they spend with an adviser, the better they will be and the more prepared they will be.”
Miller says the implications of the findings are clear: more must be done to encourage Australians to seek advice, especially about retirement. Part of the solution is to ensure there are more channels through which advice can be accessed.
“One of the reasons we’ve been going down the track of digital is not that digital necessarily will replace face-to-face advice, but what it does allow is a good entry to advice for customers to start to see what they should know, what they should ask, and therefore when they go to the adviser they feel like they are better prepared for the advice experience.”
‘Sense of unpreparedness’
Miller says that behind the sense of unpreparedness is a constant tinkering with superannuation rules, which has undermined confidence in the system to meet its objectives. Miller says setting clear and agreed objectives for the superannuation system, ensuring stability in the rules, and encouraging more people to seek out professional advice, are three things that together would significantly increase how well prepared Australians are to face retirement.
“It’s definitely put doubt in the minds of many Australians about superannuation and just made it sound even more complex than it was before,” Miller says.
“But if you link that back to ‘where do you go to get through that complexity?’ advice is your answer, and going to see an adviser is still the right place to go.
“We really want the government, and any future governments, to make sure they are really clear about superannuation objectives, and don’t do lots of changes that create that uncertainty or doubt, if there is doubt, the best place to go to is an adviser.”
Key findings• Millennials are feeling the pinch, with those aged 25 to 29 significantly more likely to feel unprepared (79 per cent) • More than half of those with investment properties or shares felt better prepared for retirement, compared to only 15 per cent of those with none of these assets • Unsurprisingly, women were significantly more likely to feel unprepared (74 per cent compared to 57 per cent of men) • Of those currently retired, 57 per cent of women fear that they will outlive their retirement savings, compared to only 32 per cent of men • Australians are beginning to top up their retirement savings and even consolidate their super: • Despite increasing awareness about the importance of super, it’s still not at the top of the priority list for most Australians. If gifted $50,000, most participants would opt to spend the money on other things such as mortgage, savings or going on a holiday. Source: Australia Today, MLC, 2016 |
Mismatch
Meanwhile, the FPA’s research has identified a mismatch between the number of people who say they have goals or aspirations – or dreams about the future – and the number who have sought advice to help turn those dreams into reality.
The chief executive officer of the FPA, Dante De Gori, says that more Australians have dreams, but are not living to their full potential.
The research reveals that 51 per cent of Australians are “dreaming more about the future than they did five years ago,” but 63 per cent have not created a plan to realise those dreams.
In a statement, De Gori said the results “reinforce the main goal of Financial Planning Week – that is, to reframe the conversation around financial advice, by showing consumers that by seeking the right advice from a financial planner they can achieve their dreams, whether that be home ownership, travel, investment, or simply to pursue their hobbies and interests”.
“Through our research, we have identified different risk habits and financial planning interests of Australians, along with the motivators and barriers to a better financial future. This research will in turn allow FPA members to gain a deeper insight into their clients’ mindsets and plan accordingly,” he said.
De Gori said the release of the research sets the scene for Financial Planning Week, and a range of activities aimed at raising the profile of financial planning and the work of financial planners.
A highlight is a shareable social media quiz, designed to reveal which of the four main “dreamer personalities” an individual matches (see table).
Financial Planning Week features a range of activities in addition to the quiz, including real-life video stories and commentary from celebrity ambassador and social commentator, Jane Caro.
The FPA has also produced a “campaign toolkit” that it is sending to members by email to assist them to promote Financial Planning Week.
| Personality types | Description |
Proportion of general population |
Proportion of this personality type that is female |
Proportion of this personality type |
| POKER MASTERS | Daring when it comes to finances, and willing to take substantial risks for significant gains |
12% |
46% |
54% |
| MOVERS & SHAKERS | Takes calculated risks for significant gains, focused on saving for the future. |
33% |
40% |
60% |
| RULE KEEPERS | Likes playing it safe by taking minimal to zero financial risk |
40% |
61% |
39% |
| EASY RIDERS | Often spontaneous about spending money, likes to play it safe and keep financial risks to a comfortable minimum |
15% |
52% |
48% |
| Source: Dare to Dream, Financial Planning Association/McCrindle Research, 2016. | ||||
