The ING My Generation report, released today, reveals Australian teenagers have good financial intentions, with many (71 per cent) already considering how much they will need to be financially secure in the future.
The cross-generational research reveals, on average, Gens X, Y and Z think they’ll need between $1.5 million and $1.74 million each in savings (excluding assets) to retire. This is more than double the ASFA recommendation for a standard couple that own their home.
The research also found that financial advisers are the most trusted source for getting financial advice. This is especially the case for Gens Y and Z, with more than half of each generation saying so.
Baby Boomers and Gen X are turning to advisers to help them stay on top of their finances while the younger generations (Gens Y and Z) want assistance with longer-term goals such as family planning, buying a home and retirement.
The average amount Aussies expect to pay for an annual strategic financial plan delivered via face-to-face consultations is as follows:
• Baby Boomers: $315
• Gen X: $232
• Gen Y: $316
• Gen Z: $394
The research also reveals that younger generations (Gens Y and Z) have higher fee expectations for automated online advice tools when compared with Baby Boomers and Gen X, who on average expect to pay less than $85, while Gens Y and Z have indicated a preparedness to pay more than $195.
“Gens X, Y and Z are clearly thinking cautiously about retirement and are under no illusion that you can retire whenever you want without adequate savings,” ING’s head of retail Melanie Evans said.
“However, there seems to be a reluctance to make plans, and this could be because they’re just not sure where they can go for help.”
Research was conducted in July 2018 by Rice Warner with more than 2,000 participants aged 16 to 64.
Reading most of the comments surrounding this topic one particular thing stands out – there is a significant gap between the value advisors perceive they are creating and the actual value that clients perceive from their advice. Guess what, the client wins out on this one. It might be a good idea for advisors to take a good long look at what they are selling and ask themselves what it is really worth. Instead of comparing it to what you can buy for the same price the real question should be why people don’t place a higher value on financial advice. Complaining that people don’t value what you do is not going to be the way to make the necessary changes this industry sorely needs.
No doubt there has to be value and perceived value too for Advice provided.
Maybe the Govt should ban vertical integrated advice, thus get rid of the majority of industry / advice conflicts and then be able to reduce red tape regulation and wasted costs that are hugely there to try to manage these inheriently conflicted vertical advice models the government has not only allowed but actively encouraged.
Then fees can be reduced as there is less wasted time on red tape regulation and clients can get good advice at lower costs with no conflicts of interest.
You get what you pay for. At these expectations even the nasty malformed conflicted ISA salespeople (cough cough I mean ‘fellow planners’) aren’t likely to be able to meet this – unless of course it is cross subsidised, which according to ASIC isn’t kosher.
But then again ISA get away with paying Unions corrupt fees. placing political ad’s for no member benefit, paying the highest director’s fees, splurging on hospitality and sponsorship and other undisclosed ‘indirect member fees’ all to the tune of tens of millions per annum, and falsely claim they’re ‘not for profit’ or ‘for the members’, and ASIC feel no need to investigate and the RC dopes tittter at jokes instead of querying seriously.
To put this into context we should explain to Gen Y what $394 buys in terms they understand… e.g. $394 will buy avocado smash for brekky about every other weekend ($394/$15=24+/-) for a year.
For the greedy Gen Y, avocado smash every weekend would be over $800 pa.
Alternatively a coffee (not almond milk or fancy smancy, a bog standard latte at $3.50) every working day is $910 a year.
Just shows how ridiculously out of touch Australians are with their finances and the value of a dollar…
Hi pal, seeing as you’re so good at calculations and have a passion for educating the masses.. how about you provide a quick illustration of how ongoing adviser service fees/ excessive insurance premiums/ poor advice and performance can erode retirement savings by hundreds of thousands of dollars over one’s working life?
I’m a reasonably young person working in the industry.. and while I greatly value good financial advice… I’d honestly much rather spend my money on a good breakfast than give it to a contemptuous, condescending arriviste.
Australians aren’t engaged – or worse, they’re alienated and deterred by the past actions and current inaction of the industry. Just shows how ridiculously out of touch people like you are with the people you claim to care about and serve.
Someone should tell Mr Hayne about this.
$394 buys about 20 minutes of his time. Wonder how long he would last as a financial planner?
Yeah really solid, logical comparison mate. A+.
In the red corner we have Kenneth “The Menace” Hayne AC QC. A former Rhodes Scholar, High Court Judge & a highly regarded legal mind – he has a list of achievements and qualifications longer than your left leg.
And in the blue corner we have advisers like Sam “what’s a safe harbour” Henderson. Qualifications include: pen licence obtained in year 6, Dip FP or ADFP (don’t know don’t care), had a show on Sky & appeared on the Project as an ‘expert’.
Jerry thinks he knows more than hayne, i thought Jerry would object to Hayne’s line of questioning when he was in the box, but he fainted instead.
in the defense forces they call people like Jerry jaffas, hard appearance yet soft inside, when the heat is turned up they melt
love your post. the number of finance experts in this industry is astounding.
if you haven’t got a net worth (not inherited but made by yourself) of $4.5m to $5m by the time you are 40 years of age (including your family home say $2.5m to $3), you are anything but an expert, trouble is everyone is a finance expert, yet they have made no money for themselves, have no qualifications as such but are a finance expert, HOW ?
just do a few tweets, and open a facebook page (yeah no one is allowed to do that) and presto you are a finance expert
Most lawyers will charge about $400 – $500 an hour, and charging by the hour is the way of the future and will cure all evils. How many hours it take to put advice together, 30 – 40 hours. So costs about $15,000 to prepare a compliant SOA
Agreed
Yep need to charge clients between $15k to $32k that should be standard for the value we create trouble is we have a lot of planners who do free work and then ruin it for everybody
most experienced planners (those with 7 years PQE, plus masters ) should be pricing themselves at $440 to $500 per hour, i do, and clients are happy to pay
Always knew gen X were tight
If people are reluctant to spend money on a product or service it’s often because they don’t perceive it to be of high quality or high value. This isn’t a case of “shame on the Australian consumer for not wanting to part with thousands of dollars for advice” – it’s a case of “shame on the industry for its past conduct and the atrocious reputation it has rightfully earned.”
It’d be like a restaurant plagued by salmonella outbreaks doing bugger all to rectify the cause of the issue, and then expecting to still be able to draw huge crowds and charge top dollar for their food. Not likely.
Yes we’ve got some work to do. However when the media calls every unlicensed adviser/ accountant a Financial Planner it’s a joint effort from lot’s of parties.
“yes we’ve got some work to do” wow, just wow, our industry is imploding due to incompetence and you think we have some work to do ha ha you must be from the FPA or AFA (they are useless by the way) if you are paying annual subscription fees to them please consider a more worth charity
the RC is going to redefine how financial advice is provided, in conjunction with the education requirements mandated by FASEA it will bring the industry to it’s knees, it will destroy everything about advice we know, and that will be painful for many in the short term
few will be left after 2019, then progressively to 2024
i know people think only 50% will leave, i would put the figure at 80% it will be the very bad and the very good who leave first
I was being polite by saying “we’ve got some work to do”. I can’t say we’re $@#. can I. Personally I’m sitting pretty good and a lot of other advisers also are in the same boat. The royal Commission has just justified my business model. The intention was set out in 2012 and we’ve had plenty of time to adjust. Seems like there are a lot of people moaning about changes. I went from 300 clients to 100. got rid of a lot of people who weren’t active or committed and I’ve turned away many. Yep we’ve got some work to do. 100% behind your comments on the FPA
What would happen in the Building industry if a survey found the expected cost by consumers to build a house was $25,000. It costs me $300 to pick up the phone and breathe. Just to agree upon the fees, do a letter of engagement, scope the advice is more than $300. I can’t do a legal SOA and all the associated documents, comply with AML, investigate appropriateness of existing products for $394. The entire process is upwards of $2,000. What this report suggests is that the mismatch between consumers and the price, value of advice will continue for decades to come.
A weekend in the Hunter Valley costs 2-3 times as much.
LOOK all you red tape bureaucratic ASIC / Compliance people and FASEA and all the rest, look at amounts people want to pay, you have made FP unprofitable to provide to all people except those with $$$$
You are part of the Problem. As an example CFP the FPA gets money from the professional partner program. Partners such as AMP, CBA licensees etc pay the FPA monies. That’s like a Drug company paying the Aust Medical Assocation and then Doctors trying to lobby the Government. Not going to work. Being in bed with product manufacturers creates an environment that we can’t regulate ourselves and that we are beholden to these firms. When the FPA lobbies the Government are they representing consumers, advisers or CBA Financial Planning??? FASEA and FOFA is an example of this. Treasury has no clear idea. So if you want to reduce red tape write to the FPA and tell them to get rid of the Professional Partner Program and start to represent Australians and Advisers.
Anne really? Your strident voice screeching again after calling another planner ‘scum’ bears absolutely no credibility!
The findings on what the various generations are prepared to pay for advice is interesting however, its out of kilter with the actual cost of advice. This is only going to be exacerbated as planners exit the industry.
We clearly have a lot to do in positioning the value of our advice to the non-advised public
all bases covered mate. AFA and FPA, too right. they are on it. what with campaigns like dazza and tweets from Dante about the 4F’s of his life we’ll be right alright ?
Do we really want to give advice to all anymore? The Industry Funds can charge everyone a small fee and provide advice to a few and the general public/ASIC/RC and Headware seem fine with this. Perhaps they can’t see conflicts with “Not for profit”. Small clients will no longer be viable and it is not our responsibility.
Small clients havent been viable since FOFA. Clients cost at least 2K a year in compliance, FDS, opt in, reviews, provision of personal planning software. The industry funds can keep the small ones, when they get bigger they usually start looking around for advice. Fine by me.
Wow, they are low fees to expect to pay! I think the gap between those who get advice and those who want advice will remain with the fee expectations above. I would imagine all financial advisers given all the compliance etc required would get no where near the above fee expectations.
Title is misleading. Australians are willing to pay less than the cost to serve for a retirement plan, and more likely to spend that on a dinner out with their partner