The value of advice
When it comes to our biggest financial worries, it may come as no surprise that retirement preparedness tops the list for many Australians. We may have a superannuation system which is the envy of many parts of the world but 63% of people yet to retire say they are not prepared for retirement. Over half may have to keep working past retirement age, while a similar number do not feel on track to achieve a life they would be happy with in their golden years.
However, not all Australians are feeling the same. Those who have sought advice are feeling much more in control of their future retirement. While only 26% of people who have not sought advice say they are ‘very’ or ‘reasonably’ prepared for retirement, 64% of those who are advised say the same.
It’s a similar picture when it comes to our overall financial security. At a time when the economic outlook is starting to look more uncertain, only 17% say they would be financially stable if they were to lose their job tomorrow, compared to 35% of people who are advised.
If this is the case, what is stopping more of us from seeking financial advice? Is it a lack of trust following last year’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry? In fact, only one in 10 cited bad press surrounding financial planners as a key reason why they have never sought advice.
The key reasons people do not seek advice is they don’t feel they can afford it, or they don’t feel their circumstances justify the need. Financial advice is important for individuals and their families but also for society as a whole. The benefits are not just monetary, financial advice also leads to improvements in people’s mental health, family life and even physical health.
In our survey of 2,000 Australians late last year, not only did people who are receiving advice say their financial wellbeing had improved - three-quarters confirmed this - but they also reported much broader benefits. Half of people said that their mental health had improved, while 38% reported that their family life was better. Work satisfaction, social life and physical health were also high on the list.
Aside from your finances, which aspects of your life have benefited from receiving financial advice?
* Multiple answers allowed. n = 502; respondents who are currently receiving or as and when they need financial advice
”63% of people yet to retire say they are not prepared for retirement”
People’s financial worries are also reduced; 56% of Australians worry about money at least monthly, that number jumps to 7 in 10 for those who do not receive financial advice. Australians receiving financial advice are twice as likely to rate their level of financial wellbeing as high, or very high, compared to those who are not receiving advice.
So, while people often seek advice due to a life event or milestone - retirement being the top reason - those that receive advice then go on to report the benefits are much wider reaching. The survey clearly shows that financial advice has a significant role to play in the lives of Australians.
Alva Devoy, Managing Director, Australia at Fidelity International