The superannuation industry looks after its members in the accumulation years. Funds must now invest in advice to help people in retirement make the most of those savings.

If superannuation funds want to maintain our relevance for members as they enter retirement, then we need to tackle the challenge of providing affordable and appropriate financial advice.

Ordinary Australians typically hate talking about money.

A lack of financial literacy, along with social taboos around discussing money matters, make many people shy away from important conversations about what they could be doing to build and protect their savings.

As a result, when it comes to figuring out how to achieve the retirement lifestyle they want, too many people muddle through alone, not knowing what to do or where to turn for help. This is a cycle
we need to break.

At any life stage, people should feel empowered to spend their hard-earned income and make financial decisions that will help them live a higher quality life now and in the future.

In the advice community, we know the marked difference professional advice can make to people’s lives. In recent years, a growing body of research has shown people who receive professional advice tend to report having greater peace of mind and say advice is worth more than it costs.

Now new research supports the idea that people who receive advice will probably retire wealthier as a result.

New research

At the Association of Financial Advisers annual conference on the Gold Coast in October, Sunsuper released a report titled The Value of Advice.

The report is based on research conducted by CoreData, commissioned by Sunsuper, to find out not only how Australian couples felt about the benefits of receiving financial advice, but also whether there was evidence to demonstrate those couples who receive advice are better off in the long run.

Our findings show that not only are advised couples wealthier as a consequence of the advice than if they hadn’t got professional help, but also they’re more likely to achieve their personal lifestyle goals.

More than 1000 working Australians were surveyed as part of the research. Of those who had not received financial advice, 42 per cent said they planned to rely on the government-funded age pension. Only 16 per cent of those surveyed who had not seen an adviser expected to have a good standard of living in retirement.

In comparison, among those who had received advice, 80 per cent said it gave them more confidence to make financial decisions and 77 per cent said they felt better prepared for retirement.

CoreData also modelled the financial impact of common life experiences and milestones to show how financial advice can help fund lifestyle goals such as family holidays, private education and trauma cover.

Three case studies included in the report reflect the sorts of day-to-day financial aspirations most advisers would recognise.

Real-world benefits

One example modelled the impact of financial advice for a couple in their 30s with two young children and projected they would be $239,185 better off at retirement. In the real world, this would mean they could pay down their debts and still afford six additional years of private education for two children and enjoy a family holiday every year until retirement.

Ensuring financial security should a family member become seriously unwell is important for many, so the research also looked at the affordability of trauma cover. The modelling found that, with advice, the couple in their 30s could afford trauma cover for 32 years, while a 50-year-old couple could enjoy 10 years of cover.

As an advice and adviser community, we have an opportunity to help break down barriers to accessing financial advice. To do so, it’s important we continue to educate people at every life stage and demonstrate how advice contributes to sustaining a higher quality of life, greater peace of mind, and being better prepared for retirement.

Anne Fuchs is head of advice and retail distribution at Sunsuper.

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