Financial advice highly valued but Australians are still reluctant to seek professional advice: BlackRock

Australians rank the state of the economy as their number one concern, and only half of all Australians feel confident about their financial future.

These were some of the key findings from BlackRock’s inaugural Global Investor Pulse Survey released yesterday.

The survey of 17,600 respondents, including 1,000 Australians, was commissioned by the world’s largest investment manager, BlackRock, to test consumer attitudes and opinions about savings, investments and superannuation.

Key findings, outlined below, shed light on Australia’s retirement hopes, use of financial advice and approach to property.

Financial advice conducive to good financial health

Despite the fact that financial advice is highly valued when it is used, many Australians are still reluctant to seek professional advice, and only 15% of Australians use a financial adviser.

Of those that do, two thirds feel positive about their financial future, compared with only half of Australians in general.

So why do so few Australians seek financial advice when the benefits are so clear?

Not surprisingly, income plays a key role. Twenty-five percent of those who earn in excess of $150,000 (or with household income in excess of $160,000) use a financial adviser, compared with only 10% of those on lower incomes.

Mark Oliver, BlackRock Managing Director, commented: “As the survey shows, financial advice is still the preserve of a small minority, but those who use it value it highly. For instance, in Australia, 89% of advised investors said that professional financial advice was good value for money (compared to 84% globally), while 93% said that it helped them to select the right investment products for their needs (compared to 87% globally).”

“However, the survey also highlighted that the use of financial advice was highest among the 55-64 age bracket, or those approaching retirement. It is well known that the earlier we start planning for retirement, the better the outcome, so we would encourage young Australians as well as those approaching retirement to engage with a financial adviser.”

When asked what concerns Australian investors when it comes to the security of their financial futures the state of the Australian economy ranked as the top reason, followed closely by job security, having to spend more than they earned and healthcare costs. Drilling down it was clear that those on lower incomes were most concerned with spending more than they earn. Unlike those who were more affluent they were very concerned with changes to government pensions and social security as well as housing costs. In contrast, those who were more affluent were preoccupied with the state of the Australian and global economies and also were more interested in tax policies, changes to interest rates and stockmarket volatility.

Property is a priority

Australia’s love for property was evident in the survey, with a clear difference between Australia’s attitude towards buying and saving for property compared with the rest of the world.

We spend more of our planning time on purchasing a new home (20% of time in Australia compared to 17% globally), and are more interested in paying off the mortgage on our homes (28% compared to 23% globally). We are also more interested in saving for a deposit for a new home (17% compared to 13% globally).

Investment property ownership in Australia sits at 15% of those surveyed, which is well above the European and North American averages, where rates of ownership were 10%.For more affluent Australians the rate of ownership increased to 35%.

Mr Oliver said that it was no secret that Australians have always had a love affair with property.

“However, investors need to be mindful that while property has its place in the asset class mix, they should ensure they have a well-diversified portfolio.”

Planning for retirement

According to the survey, Australians are more enthusiastic about their need to plan for a comfortable retirement than their global counterparts, with 76% of retired Australians believing in saving for retirement as early as possible, compared with 65% globally. Seventy-two percent encouraged a long-term approach to retirement saving, compared with only 55% globally.

“While Australia has made great progress towards self sufficiency with the superannuation guarantee, it is widely recognised that more needs to be done to fund a comfortable retirement. It’s not surprising to see that the majority of retirees recommend that we should start saving earlier and take a long-term view when it comes to retirement planning, Mr Oliver said.

“At BlackRock we echo those thoughts and encourage Australians to be positive about our increased longevity. Investing for a long retirement is complicated but a few simple steps may help your longevity work to your financial benefit: for example, investing early …and often, allotting small amounts over time could potentially be easier to bear than having to play catch up. Also, consider all your investment options, including alternative investments, and combining indexed and active strategies to manage diversification and costs along the way.”

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