One in two Aussie employees likely to seek professional advice as financial stress ‘rises sharply’

An estimated one million Australian employees are “severely” financially stressed, more than double the number since 2020, according to research by AMP.

The wealth giant’s research — conducted biennially since 2014 — found that financial stress is costing businesses and the local economy an estimated $66.8 billion, due to employee distraction, lost motivation and productivity.

Two key drivers for the rise in financial stress were identified — more employees are dissatisfied with their current financial situation and are having difficulty meeting their expenses, and anxiety levels have increased due to concerns about cost of living, rising inflation and interest rates.

Those severely or moderately financially stressed include:

• 27 per cent of women, up from 19 per cent in 2020
• 25 per cent of single parents aged 30-44, up from 13 per cent.
• 26 per cent of part-time workers, up from 18 per cent in 2020

“It’s no surprise we’re more financially stressed than ever,” AMP’s general manager member engagement, Stephen Owen, said.

“Following an emotionally unsettling two to three years with COVID, we’re now facing into rising interest rates, general cost-of-living pressures, a property downturn, and jittery investment markets.

“What’s particularly concerning is the impact on women, single parents and younger Australians, where stress levels have increased the most.”

Encouragingly, AMP noted that one in two employees have indicated they are likely to seek professional financial advice in the next 12 months. However, due to an “intention-action gap”, only 19 per cent are likely to.  

Meanwhile due to the impacts of the COVID pandemic, the number of workers who have reassessed their financial situation and set goals has increased from 17 to 34 per cent.

Mr Owen said because of this, as well as historic unemployment lows, and the economy being in a “relatively robust shape”, there is reason to be optimistic.

“Importantly, the rising stress has also been a catalyst for many Australians to engage with their finances — more of us are recognising that simple steps such as setting financial goals, establishing a budget and accessing credible online educational resources can have a positive impact on financial peace of mind,” he said.

“These actions are the foundations for financial wellbeing, irrespective of income and age.

AMP's report follows research released by the University of Newcastle and Greater Bank this month that revealed more than one-third of Australians are financially illiterate.

Speaking to ifa following the report’s release, senior adviser at Tribeca Financial, Nathan Fradley, said the results show how important advisers are in supporting a client’s financial wellbeing.

“Financial literacy is so fundamentally important. It both helps bridge income inequality gap, as well as reducing the cost of a variety of social and financial government programs — but most of all, financial literacy leads to financial wellbeing, the sense of security and freedom of choice that can come from knowing where your money goes now, and what that means for you in future,” Mr Fradley told ifa.

“Advisers play a key role, both in making the right decisions, but also preventing poor decisions and most importantly preventing inaction — which can be in a lot of cases the most detrimental.”

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.