Universal access to affordable financial advice is a key to the future wellbeing of all Australians in this ‘new normal’ pandemic world, according to analysts.
CoreData research that involved a survey of 1145 Australians found four in five had taken action to minimise the impact of COVID on their personal finances.
The top five actions included: reducing discretionary spending (63.5 per cent), reducing spending on essentials (47.8 per cent), cancelling memberships (36.7 per cent), seeking additional work (16.9 per cent) and applying for financial support or a loan (12.8 per cent).
Yet more than twice as many households were in a fragile financial position now compared to before COVID.
The survey found that Australians were making long-term changes, and many estimated it would take more than a year – or never – to return to pre-COVID spending levels. Thirty per cent said they expected to start spending again within the next six months, but 20 per cent said they might either need more than 12 months or may never go back to the same level.
Hardest hit areas were memberships and subscriptions such as gyms and streaming services.
At an event titled Uncovering the Value of Financial Planning Advice, key players in the financial planning profession discussed the importance of financial planning and how to ensure more people had access to quality, affordable financial advice.
Macquarie University chair of financial literacy Paul Clitheroe said the current framework meant advisers were restricted to only being able to help high net worth individuals and other relatively well-off consumers who could afford to pay for advice.
“That satisfies [roughly] the top 10 or 20 per cent of the population of Australia. What do we do for the other millions of people who want to talk about everything from their credit cards, to investing a hundred dollars, to talking about [whether they should] put a thousand dollars in super or [towards paying off their] mortgage? That remains the challenge.”
Financial Planning Association (FPA) chair Marisa Broome said the extraordinary and life-changing moment in history was affecting every facet of our lives – our health, our work, our emotions, our friendships, our travel plans, our life plans and, of course, our financial circumstances.
“Money plays such a critical role in our ability to live the life we want,” she said. “Especially in the face of challenging and unplanned circumstances.”
Ms Broome confirmed that financial advice was hard to access, expensive to pay for and beyond the reach of most Australians.
“We at the FPA want to change this,” she said. “We want more Australians to seek financial advice, but to do that they need to be able to access it and afford it. I passionately believe that helping Australians build their financial capability and understanding is critical not just to them individually but to the nation.”
Alan Kirkland, CEO of consumer advocacy group CHOICE, said that customer-centric financial advice needed to start with a good understanding of customer needs, aspirations and financial capability, and then exploring the different ways of providing advice.
“It’s about really assessing when advice as provided by a financial planner is actually the right approach for a person and if it is, whether they need one-off advice or ongoing advice. Because sometimes, good advice is about giving people the skills they need to make decisions themselves through their day to day life,” he said.
The CoreData research found the top two requirements for support were: ‘Tips and advice from companies I pay regular bills to on how to reduce bills’ (31.9 per cent) and ‘a website or other free accessible resource that explains what financial services and supports are available’ (27.2 per cent).
Has financial advice become more pressing for you since COVID hit? Have you sought advice from a planner or from your super fund? Were you satisfied with this advice? Will you seek more advice?
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