Retirees shun financial advisers during virus lockdown

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Most Australian retirees are shunning professional financial advice during the COVID-19 crisis.

Allianz Retire+ surveyed 1007 current and prospective retirees in May 2020, finding 79 per cent of them had not sought financial advice during COVID-19.

“Only one in five retirees felt that they had easy access to professional financial advice and approximately a third felt financial advisers were ‘for the rich’,” the report says.

Nearly two-thirds of those without an adviser felt the service was too costly.

“We have to change perceptions of financial advice among retirees and increase access to affordable advice,” says Allianz Retire+ CEO Matt Rady. “The advice proposition is proven to be an integral part of providing individuals with confidence and certainty in retirement. Those who use an adviser told us they feel more confident and secure in their financial position”.

In YourLifeChoices’ 2020 Insights survey, which had 5477 respondents, 27.55 per cent said they did not feel sufficiently financially literate to handle their retirement income needs without professional advice.

Only 45.12 per cent of respondents said they had visited a financial professional to plan their retirement income.

Mr Rady said 68 per cent of those advised during COVID-19 were sticking to their financial plan.

“That means advice is definitely deterring people from making sub-optimal investment decisions based on fear or a lack of understanding.”

Anyone who gives financial advice must have an Australian financial services (AFS) licence. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommended financial advisers would need to be individually registered in a similar way as doctors and lawyers.

moneysmart.gov.au advice for choosing a financial adviser:

Decide what you want from financial advice
This depends on your stage of life, how much money you have, and what you’re trying to achieve. A financial adviser can help you make financial decisions and plan. This might include advice about budgeting, investing, super, retirement planning, estate planning, insurance, and taxation.

Choose the right financial advice for you
A financial adviser can give you general financial advice, which doesn’t consider your personal situation or goals, or how it might affect you personally. Personal financial advice is tailored to your financial situation and goals, and is in your best interests. It can include help with one issue, such as how much to contribute to your superannuation; comprehensive advice and planning covering savings, investments, insurance, and super and retirement planning; and ongoing advice, which includes regular monitoring of your affairs.

Find a financial adviser
You can look for a financial adviser through the Financial Planning Association or the Association of Financial Advisers. Other options include your super fund or your lender or financial institution. Make sure you check the moneysmart.gov.au financial advisers register to check your adviser is licensed. And ensure you check the adviser’s Financial Services Guide, which shows the services they offer; how they charge; who owns the company; links to product providers; and their licence number. It should be on their website, or you can ask them for a copy.

Meet and compare financial advisers
When you meet an adviser, ask them about their qualifications, main client base, and specialty areas; what fees you will pay, how often and what you’ll get in return; how they’ll manage your money; how often you’ll meet; what information you’ll receive and how often; how they’ll consult you on decisions; how they’ll monitor and manage your investments; what commissions or incentives they receive from financial products, and how they’ll choose products to recommend to you; who’ll look after your account when they’re away; how they’ll deal with complaints (see problems with a financial adviser to learn about the complaints process); how to end your agreement with them (including any penalties or notice periods).

A good adviser will get to know you, keep you informed, and help you achieve your goals. They’ll also discuss how much risk you’re comfortable with.

moneysmart.gov.au also offers important advice on checking financial advisers; planning with advisers to achieve your financial goals; how much advisers should cost; and steps to take if you’re unhappy with a financial adviser.

Have you employed a financial adviser? How could professional financial advice help you?

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Written by Will Brodie

20 Comments

Total Comments: 20
  1. 0
    0

    Main reason is the fact that most advisors direct investments to where the advisor gains the best return for themselves.

    • 0
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      100% right.
      I continue to be amazed that people will spend 50 years earning and saving for retirement but will not spend 2 weeks on learning to manage their money. There are very good calculators on Noel Whittaker’s web site to calculate both earnings and superannuation draw down rates.
      I would suggest that any advisor who directs you to any investment other than the low cost Industry Funds or the low cost Exchange Traded Funds is acting in his own best interest, not that of his client.
      Personally,I left school at age 13, am now 79.My super is with Sun Super and my total investment costs are about 0.21% per year.My money is invested as follows:
      Australian shares Index 65%. World ex Australian global shares (unhedged) 23%. Diversified Bonds Index 12% which is the one I draw my pension from and covers 30 months of payments. Sunsuper rebalances it automatically every 6 months or I can do it myself online.
      Any one who thinks shares are a risky investment should read Peter Thornhill’s book,Motivated Money, Plus John C Bogle’s Little Book of Commonsense Investing and his book Enough. He explains where the money goes to when put in the hands of advisors. Jack Bogle was the founder of Vanguard Index funds and points out all the flaws in the system when you entrust your money to the money managers.
      How much money do I have? I have “Enough”. I grew up in very hard times and learnt from my parents to never spend more than you earn and cut back in hard or uncertain times.

    • 0
      0

      Bogle was a bonus to savers who want an easy and cheap way to access shares and bonds. I’ve been with Vanguard for years and have no complaints at all.

      I rebalance occasionally and take profits when the market gets a bit heady. In the past for foreign travel or renovations.

      I’m glad I did. I’ll go no more a roaming now.

  2. 0
    0

    As an IT professional I once did a short contract job in the offices of a bunch of financial advisers after being laid off for the second time in 6 months. (A relatively normal event in that industry.) Asked several in turn how I should plan for this. Got different answers from every one of them.

    Useless.

  3. 0
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    Information is freely available so why pay for it?

  4. 0
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    We fall into the category of not seeking financial advice during the pandemic although that doesn’t mean we “shunned” it. We are in a large industry super fund which is doing quite well and we are confident that they are doing the best they can for their investors. I note that once more we are bombarded with statistics and once more the context of the statistics is very loose.

    What is the breakdown of current and prospective retirees? “Only one in five retirees felt that they had easy access to professional financial advice and approximately a third felt financial advisers were ‘for the rich’.” How many retirees were involved and does the third who felt that the financial advisers were ‘for the rich’ represent a third of all retirees or a third of the one in five retirees?

    “Nearly two-thirds of those without an adviser felt the service was too costly.” What information was given from the two-thirds as to how they have arrived at the costs being unacceptable? Were any SMSF retirees involved in the survey? Sorry but this article is big on vagueness and small on detail.

  5. 0
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    I took out an allocated pension 30yrs ago and it had done well but then mercantile mutual took over and shortly after by ING which halved my investment in12 months.ACCC said I had a good case and they would go for it,I questioned the 8 month delay and they said they had reconsidered and were not following up,,,later I moet an employee there who told me that the small fry had been dropped as they were-flat ut going after the banks

  6. 0
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    More people would turn to professional advice if there was more accountability on the part of the financial adviser. Too often the advice given is driven by other motives and not necessarily in the best interest of the person seeking the advice.

  7. 0
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    Nice advertisment YLC. How much did the financial services org pay ?

  8. 0
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    At the end of this month, I have kept a tally of everything I have spent every day for the last 5 years so when I add it up I add 5% CPI so I look at what I could be spending next year I am in an industry super and I am in conservative 30% shares 70% defensive so I will not be seeing a Financial Advisor I have never been a punter and I don’t think I will start with my super

  9. 0
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    WE went to a finacial advisor about 19 years ago, He asked us about our situation and how much money we had to manage and then said there is the door you don’t have enough money for me to worry about.
    This was a blessing in disguise as my wife was so peed off she went on to educate herself and learn the tricks of the trade.
    After my retirement we did have a meeting with the advisor of my industry super fund, apart from a small change he advised us we could do he said keep on as we were on the right track, we have no reason to see anyone since and things could not have been better since, we thank the first advisor for peeing off the best self taught financial guru you could find.
    We sit here during the corona times and keep saying under our breath when there is talk about advisors “don’t do it”, educate yourself now.

  10. 0
    0

    You only need to read some of the financial advice given by “experts” on YLC to see how hopeless some of them are. If you spend 50 years working, saving and investing your hard earned cash, spend some time along the way to learn how to care for it and save even more on financial advisors and bad advice.

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