What do people want in their financial adviser?
Well, according to a recent report, it’s providing peace of mind, preferably from a financial planner rather than an accountant and the earlier, the better.
But the barriers to finding suitable advice are formidable.
Investment management company Fidelity International’s latest report into financial planning for older Australians has found that people with an active relationship with a financial planner are better off on a number levels.
Read: March 2023 Age Pension increase tipped to deliver spending boost
Financial Planning Association of Australia chief executive officer Sarah Abood said the results “couldn’t have been clearer” about the benefits for clients.
“They suffer less financial stress, enjoy a higher quality of life, have more financial confidence and are more satisfied with their wealth,” Ms Abood says.
Fidelity International’s New Life Old Life report surveyed more than 1200 Australians aged over 45 and found financial advisers were preferred to help them through retirement rather than accountants or employers.
The report found that despite retirement age being 66 years and six months, which will reset to 67 years in July, most Australians start winding down their working commitments at 61.4 years and fully retire at 63.5 years, and many had not planned to cover that gap.
However, the skills gap since the pandemic has opened up opportunities for older Australians to re-enter the jobs market and continue to contribute to the workforce, but that doesn’t mean people should stop thinking about what their retirement is going to look like.
Read: Australians delaying retirement by five years, survey reveals
Fidelity International head of retirement client services Richard Dinham says despite good intentions, most Australians were not planning for the final chapters of their life.
“Many of us invest lots of energy into building our careers and spend years, perhaps even decades, planning our ascension up the corporate ladder,” Mr Dinham says.
“But too few of us take positive action to improve the circumstances of the inevitable wind-down phase of our working life.”
The report found that pre-retirees were the least financially capable and had the lowest emotional resilience. Around one in two worried about money at least monthly, and one in three worried about money daily. It was also found those who felt completely out of control when they stopped working had the lowest life satisfaction scores.
Of course, the answer would be to find some financial advice, but that may pose problem.
According to the report, more than 40 per cent of advisers left the industry following implementation of government standards.
Read: Seven reasons seniors stay frugal in retirement
Not only are there fewer advisers, but since the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, each adviser now has fewer clients.
According to financial adviser review company Adviser Ratings, each adviser now manages 10 fewer clients than they did three years ago – and their average fee has skyrocketed by 40 per cent.
“Understandably, the main reasons pre-retirees are not currently seeking financial advice relate to a lack of affordability,” the report stated.
“Three in 10 say they don’t feel they can afford it, and one in four says they can’t justify the cost.”
The report found 55 per cent of respondents would prefer to consult a financial adviser compared to an accountant, 23 per cent.
Have you sought out financial planning for your retirement or otherwise? Did it make you feel confident about the next phase of your life? Why not share your experience in the comments section below?
