As most within the advice space would be aware, Australia is about to undergo the largest wealth transfer in its history over the next two decades, with $5.4 trillion set to change hands.
However, joint research, called The Big Lift report, carried out by Iress and Deloitte that an alarmingly high number of Australians do not have the levels of financial literacy that is needed in this transition. According to the research, 59 per cent of Australians have low levels of financial literacy, with only 17 per cent having an “advanced level”.
Furthermore, 48 per cent find financial concept “too complicated” and lack the confidence to handle their money responsibly.
However, the company’s highlight that, while these numbers are alarming, they also present an opportunity for the financial advice and super sectors to help boost the financial literacy of Australians to best prepare for the wealth transfer.
“Financial capability is critical for building wealth, enhancing wellbeing, and supporting Australia’s economic prosperity,” said Deloitte Access Economics Partner, John O’Mahony.
“Yet 59 per cent of Australians have low financial capability. While some foundational skills are built in schools, financial capability is strengthened through everyday financial engagement, representing an opportunity for the financial services industry.”
He elaborated that the research found that 57 per cent of those surveyed reported more confidence in financial decision-making after receiving financial advice and education.
“There is an opportunity for advisers and superannuation funds to help Australians turn knowledge and understanding into confident action,” he said.
“By integrating financial education into everyday services, providing accessible advice, and offering innovative guidance models, the financial services industry can help Australians make informed decisions about saving, investing, and planning for the future.”
Modelling from Deloitte found that if all Australians were to uplift their financial capability to an ‘advanced’ level it would equate to a $122,950 increase in average household wealth, or $1.2 trillion nationally.
“With rising living costs, sophisticated financial scams, and $5.4 trillion in assets set to be inherited by younger Australians by 2050, the need to act is urgent,” O’Mahony said.
Iress CEO Wealth APAC Kelli Williams added that the new research clearly indicates advisers have a role to play in helping to uplift overall financial literacy, including leveraging technology.
“Technology and regulation has given advisers an opportunity to re-think how advice is delivered, what services are offered, and who can access them,” she explained.
“With 63 per cent of Australians under 40 being open to digital advice solutions, embracing hybrid models, AI, and chat-based tools can help scale advice efficiently and meet clients where they are.”
Williams added: “At the same time, offering financial education, simplified products, and coaching programs can build client confidence and unlock new revenue streams.”
