Where will Australians under 50 seek advice?

Speaking exclusively to ifa in Canberra, Financial Services Minister Stephen Jones pointed to the large portion of Australians that are under 55 and in need of advice beyond retirement planning.

Noting that the banks have yet to make it clear what they want to offer that they currently can’t, Mr Jones highlighted that Aussies in their mid-40s to late 50s – who may have come into an inheritance or are just in need of financial advice – form a demographic group “we haven’t quite nailed yet”.

“Or maybe they’ve got a capital gain somewhere and they got a lump of money and maybe they’ve not been that financially savvy themselves, or don’t have the time, or whatever it is, but they could really do with some advice,” he told ifa.

“And if the place they’re going to at the moment is Instagram or TikTok or Google. That’s not a very safe place to go to get financial advice.

“I think we’ve got to do something with that group as well. And they probably only need once-off advice. They don’t need to be having an ongoing contract with a financial adviser. So, I’ve got to find a way of dealing with that issue as well.”

Mr Jones added that ensuring all consumers are protected from scams and fraud is also high on his priority list.

“I figure if we don't find a safe place for this group of people, there will be hunting season for the scammers,” he said.

As for those under the age of 40, Mr Jones suggested that there’s no shortage of mortgage brokers.

“People, when we’re talking about advice, seem to forget there is a group of credit advisers out there called mortgage brokers and there’s a lot of them and they’re competing with each other and the banks to provide a decent service to their customers. I think we got credit advice, at least in the mortgage space. I think we got that pretty much sorted there.”

The minister’s comments follow chief executive of superannuation at CFS Kelly Power’s recent observation that it’s not logical for superannuation funds to provide advice regarding budgeting and expense management to the growing cohort of younger Aussies seeking advice.

“I think there are some aspects that super funds can provide, and we’re looking at some of those around investment selection and contribution strategies and insurance, but that’s insurance within super. But outside of that, general insurance and other things, there isn’t an obvious solution for that at the moment,” she explained.

Recent research from Colonial First State that found under-55s are looking for advice.

Namely, based on a survey of over 2,000 individuals, it showed that over 50 per cent of Aussies under the age of 40 are open to financial advice, compared to 36 per cent of those aged 40 to 59 and just 15 per cent of those 60-plus.

This contradicted what had previously been considered a truth – that those over the age of 55 are more inclined to seek an adviser than younger generations.

“The research was surprising from that perspective,” Ms Power said.

“What we observe, both from our calls from our membership but also our experiences in the market is that it’s typically the 55-plus cohort where they start to take an interest in their super, they start to question how much they need and prepare for retirement, and at that point, engage with advisers.

“And so, to find that over half of the people we surveyed, and it was a representative sample, under the age of 40 were open to advice was something that really did open our eyes to the fact that, I think, the current cost-of-living pressures and what we’re really seeing happening at the moment, has meant that people need help.”