When it comes to money and our financial futures – who do we turn to and trust most to give quality advice? According to the 2013 RaboDirect National Savings & Debt Barometer (NSDB), 36% of Gen Y relied on family and friends for financial advice – using their loved ones over a bank (33%), an accountant (14%) or a financial adviser (13%).
At the same time, Gen Y is the most trusting of financial planners as a source of financial advice of all the generations. However, cost appears to be their biggest hindrance to enlisting the help of a qualified financial planner, with 60% of Gen Y respondents saying they think using a planner would be expensive.
According to Bede Cronin, RaboDirect’s National Manager Key Account Services, these statistics highlight the need for greater awareness of the benefits of financial planning compared to the actual costs of obtaining it.
“While it is certainly encouraging to see that financial matters are being discussed with friends and family instead of being treated as a taboo topic, it is still important to enlist the help of a qualified professional to ensure that advice is sound and tailored to individual circumstances,” Mr Cronin said. “In light of Gen Y’s perception that financial advice is expensive, seeking free advice from family and friends may be viewed as the better option, however, when it comes to your financial future we would always recommend seeking tailored professional advice.”
Based on the NSDB results, RaboDirect is encouraging financial planners to confront the perception that advice is too expensive and demonstrate the role they can play in developing long term strategies to deliver financial security.
“Our findings reveal a clear opportunity for planners to engage with younger generations to teach them about the value of financial planning and show them the benefits that come from investing in their financial wellbeing. From the work our Key Account Services team does partnering with financial planners to deliver savings and cash investment solutions to clients, we know that many financial planners do an excellent job in building lasting relationships with clients. The opportunity for all planners is to not just develop strong relationships for older generations but to develop a clear plan for engaging Gen Y also.
“Gen Y needs to understand that financial advice doesn’t have to be complex and costly. It can be simple, affordable and deliver better financial outcomes than would be achieved in the absence of professional advice. And with more than a quarter of Gen Y saying they think they will run out of money during their retirement, it is never too early to enlist the help of a professional who can design an appropriate financial plan to set you up for the future,” Mr Cronin said.
While there was some discrepancy in the survey among generations over who they trusted most for financial advice, the support for financial literacy/language being taught at schools was universal across the generations.
“Financial literacy is obviously a very important topic for all Australians and we should be doing all we can to encourage people to engage with their finances at a young age. Knowledge is key. And with a firm understanding of financial terms and concepts, we would hope to see the number of people who see financial planning daunting – currently around a third of respondents – drop significantly.
“We support initiatives that help to raise levels of financial literacy and designed the National Savings and Debt Barometer to drive important conversations among consumers about the importance of saving as well as the value of trusted professional advice.”
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- In 2013, a third of Gen Y (36%) had sought financial advice from either their family/friends compared to just 20% of Gen X and 11% of Baby Boomers.
- A third of Baby Boomers had used accountants/tax agents for advice and 20% had used a financial planner.
- Gen Y was most trusting of various sources of financial advice. Overall, the main financial institution, accountants, and financial planners were considered the most trustworthy sources of financial advice.
- There was a very high level of agreement that understanding financial terms and financial planning should be taught in schools (72% agree).
- Only 12% of respondents feel that the age pension will be sufficient; while 9% said that they can rely on an inheritance to fund their retirement.
- 34% of respondents find financial planning daunting; 33% trust the advice from financial advisers; 19% feel that financial planning is only important for those who have a lot of money
For more information on the 2013 RaboDirect National Saving and Debt Barometer or to arrange an interview with Bede Cronin, please contact:
Michelle Ryan / Katharine Verville
02 9018 8608 / 02 9018 8615
0404 381 886 / 0432 799 392