Young Aussies, advice and blissful ignorance

While advisers, and their clients, are well aware of the value of the services they provide, the greatest deterrent to those who feel financial advice is beyond their reach is the classic wisdom of ignorance.

Many young Australians have come into the world armed with knowledge at their fingertips, but that has created a false sense of confidence that when the going gets tough, a Google search will yield everything there is to know about any given topic – financial queries included.

Perhaps unsurprisingly then, financial literacy was a concerningly undervalued set of skills while I was growing up in the 2000s as a Gen Z kid. Maybe the adults assumed we could do our own research, or money management was a bit too taboo for dinner table conversation. Either way, the results were the same – we maintained our blissful ignorance.

However, we should not underestimate the extremely positive impact financial literacy skills can have, particularly since industry experts attest that those who seek advice tend to be more financially literate and make wiser financial decisions.

Whether it’s for insurance purposes, super, inheritance or anything in between, there are many young Australians who struggle to comprehend the complexities of their wealth.

This not only poses a challenge for the individuals who could benefit from advice, but don’t know it, but it’s also an impediment to the advisers who will soon be interacting with a generation that has a new set of needs and perceptions about their very profession.

This is not to say that every young Australian will be in need of personal financial advice in their lifetime. Simply, for those who are, it is essential that they know it’s there for them.

And for the advisers who find themselves servicing this generation, it is equally important that they, where they can, make steps towards closing this knowledge gap.

Young Australians weigh in

ifa asked three young Australians what they believe financial advisers do, and answers varied.

Sarah, a Sydney-sider in her last year of university, said: “A financial adviser is someone who … actually, I don’t know.”

“I think a financial adviser is someone who helps you with your finances, and advises you on the ways to use your finances best,” Sarah then added.

“It’s all about someone who helps you save.”

She believed that the primary audience for financial advice is older Australians, but also suggested, “I think financial advisers should be accessible to everyone.

“But I’m pretty sure it’s meant to be expensive.”

Meanwhile, Paris, who has recently joined the public sector, said that it involves “dealing with your money to build money”.

“I think [financial advisers] are for full-time workers, and they instruct you on how to deal with your money … so, I think it’s for middle-aged people,” Paris continued.

Emily, another Sydney-based university student, said: “I don’t know if I’m the best person to ask, but my interpretation of financial advice is any advice given by a financial adviser or expert that is paid for.

“I think it could range from a variety of topics, like a client might be asking about investment advice … or savings.

“I am a young person, I’m only 21, so I definitely think that would influence my understanding of financial advice, and also my lack of experience in seeking it out.”

It is clear that the depth of knowledge on this topic is varied, with some young Aussies recognising the diverse services provided by a financial adviser.

But while this is certainly a positive sign, the fact remains that many young Aussies clearly believe they’re not the “right audience” for financial advice.

On the bright side, a recent Colonial First State (CFS) study identified that over half (53 per cent) of Australians aged 16 to 39 are open to financial advice.

But what CFS also revealed is that 15 per cent of those under the age of 40 don’t actually know how to access an adviser, while 18 per cent said they don’t know what questions to ask.

Josh Grace, group executive, customer office at CFS, said that while cost remains the most significant barrier for those under 40, there is a clear awareness and knowledge gap.

“Many younger Australians want advice but don’t know where to start,” he said.

Last year, ifa spoke to Lifespan Financial Planning chief executive officer Eugene Ardino, who said that those who have the greatest need for financial literacy education are typically those least likely to access financial advice.

Mr Ardino noted: “As a financial services industry, we all have a significant role to play.

“Many advisers are currently involved in financial literacy programs in schools. Governments and associations need to work closely together to take steps towards finally implementing a program, that, to be honest, is in the best interests of everybody.

“There’s nothing better than dealing with a client who understands what you’re talking about.”

Opportunities that should be widely available

As a member of Gen Z, gradually gaining a grasp of financial advice in recent years has been somewhat of a double-edged sword.

As I mentioned earlier, I never really had the opportunity to sit down with my parents and have “the talk” about financial management, nor did the school curriculum offer classes conducive to financial literacy.

The growth in my knowledge of financial wellbeing is in no small thanks to the last 12 months. Before this, I “didn’t know what I didn’t know”.

Were it not for my profession, I would never have had the resources to understand the value of financial empowerment, and consequently, recognise the professionals that are qualified to personalise my path to achieving it.

It’s for this reason that the correlation between financial literacy and financial advice feels more palpable than ever.

Speaking from the perspective of someone whose journey to comprehending financial advice has been somewhat unconventional, it solidifies the fact that not everyone has these opportunities – opportunities that should be widely available.