Pre-retirees seeking more advice in age of ‘information overload’

In the next five years, 670,000 Aussies are planning to retire, with 220,000 of those within the next 24 months, according to the Australian Bureau of Statistics.

As Australia’s ageing population continues to grow, the question of how both pre-retirees and retirees can effectively manage their retirement savings is of growing significance.

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Lifespan Financial Planning chief executive Eugene Ardino told ifa that the need for retirement planning is as prevalent as ever, with this translating into an observed increase in consumers at the pre-retirement phase of life seeking out advice.

“I believe this is partly due to the ageing population in Australia combined with how complex retirement planning can be,” Mr Ardino explained.

“As the population continues to age, I would expect that this will continue to accelerate.”

He emphasised that what continues to drive more Australians to seek out advice is the “age of information overload”, as navigating a landscape flooded with numerous retirement options and products can feel like an intimidating task.

“People can access all of the different things you need to consider at the various stages of life, however, what is more difficult, given the volume of information available, is to formulate the right strategy for your particular needs and this empowers consumers to better understand what benefits they can potentially unlock from obtaining advice.

“This will continue to drive people to seek advice.”

This was echoed in Vanguard’s inaugural How Australia Retires study, released in May, which highlighted that having a financial plan and access to advice are the main drivers of confidence among Australians in retirement.

The study, which canvassed 1,800 working and retired Australians aged 18 years and older, found that 52 per cent of participants surveyed, who presented as highly confident about their retirement readiness, feel that they know what they need to do to achieve the retirement outcomes they desire and are optimistic about this phase of their life.

Notably, more than half of the respondents who use a financial adviser were also found to engage with their super fund and are twice as likely to have a detailed plan as those who do not use a financial adviser.

As such, Mr Ardino explained that the biggest challenge for both advisers and consumers is actually being able to cater for everyone who needs it.

“With adviser numbers continuing to fall (albeit more slowly) or flatline for a while, and costs rising, not everyone who wants or needs advice will get it but with QAR (Quality of Advice Review), we are moving in the right direction.”

“All of this is the obvious opportunity for financial advisers as it creates a supply and demand imbalance in their favour.”

A recent report by Class Ignite revealed a lack of knowledge regarding their retirement is seeing some Australians forfeit potential funds.

Namely, its 2023 Annual Benchmark Report showed that the need for strategic superannuation advice has never been greater.

However, according to Joshua Williams, chief operating officer at SuperGuardian, such advice seems harder to come by, and all too often, the basics are being overlooked.

“Australians need help with their superannuation, and for the discerning advisers who are willing and able to provide strategic superannuation advice, opportunities abound,” Mr Williams said.

“Of the 2.78 million APRA fund members aged 65 and over at 30 June 2022, only 1.41 million members were in tax-free pension phase. This includes those under 65 who may have satisfied another condition of release, such as retirement or ceasing employment, so 50.9 per cent may in fact be optimistic,” Mr Williams said.

“If I were an adviser, I’d be getting straight on the phone to book in a meeting with these members to highlight how much they’re generously donating to the ATO and, by extension, their fellow Australians.”