Advice sector at a loss as Aussies turn to families for retirement advice

Recent research by MFS Investment Management revealed that a slim 29 per cent of Aussies are turning to a financial adviser to figure out their retirement plans, with 30 per cent preferring to heed the advice of their families and 32 per cent choosing to tailor their financial futures based on advice from their super fund.

Of the 29 per cent opting for an adviser, over half chose their planner based on the fees they charged, with their level of experience or expertise occupying second place.

The survey further revealed that 34 per cent of men sought professional financial advice prior to retirement compared to just 24 per cent of women.

Commenting on these findings, MFS Investment Management senior managing editor, Marian Poirier, said the potential for advisers to increase their presence is immense.

“We see enormous potential for advisers to provide a greater and more specialist role in providing asset allocation advice to superannuants, especially women who remain under advise despite their working lives typically being more varied and punctuated by life events,” Ms Poirier said.

MFS also found that Australians were particularly keen on increasing the number of ESG investments in their superannuation portfolios, with 74 per cent of those surveyed expressing an interest in more ethical behaviours.

The desire or interest in ESG investments was particularly common among Millennials at 83 per cent, versus 72 per cent of Generation X-ers and 65 per cent of Baby Boomers.

Ms Poirier said that ESG investing was changing the landscape for investors and those who advise them.

“ESG investing continues to transform the way in which investors view and allocate their capital, and while quality long-term, purpose-focused investments inherently integrate ESG, superannuation funds are responding to demand for greater depth and diversity of investments that target change and impact,” she said.

Moreover, she noted that the large volume of noise associated with ESG investing represented an opportunity for financial advisers to engage overwhelmed clients.

“We see a growing role for advisers to educate investors on the many shades of green and ESG within offerings, along with pointing out the differences between asset managers that integrate ESG into their overall investment approach and those that approach it strictly from a product perspective,” she said.

Moreover, while Australians remained mostly optimistic about their retirement, concerns around longer work lives in the wake of the COVID-19 pandemic have been felt by many, but most prominently by those under the age of 45. This, Ms Poirier stressed, creates further opportunities for advisers.

“The shock and persisting uncertainty caused by the pandemic has undoubtedly left an indelible mark on younger retirement investors, and their concerns need to be properly addressed for them to get back on track, with a deeper appreciation that uncertainty and opportunity are often key to long-term investing,” Ms Poirier concluded.