According to a survey about the value of financial planning advice [1], non-advised Australians are missing out big time, and not just on wealth benefits. It seems their emotional well-being is also adversely affected as they worry about money and a lack financial control in their lives.
In this, and coming articles, we review the findings and why as partners, parents and grandparents, we need to share our financial advice networks and the financial knowledge we’ve gained from them with those we love.
By way of background, respondents to the survey and report were aged over 45 years of age pre-retirees working full-time in the peak of their careers, semi-retired, transitioning to retirement and early retirees.
Even the best laid plans…
When it comes to retirement planning, the findings identified that even though the respondents’ best laid plans were usually for retiring around their 65th birthday (64.8yrs) the reality is that as many as one in three retired earlier than expected. The top reasons for this were their own ill-health, the need to care for someone else with ill-health or they lost their job or their role was made redundant.
For financially advised-Australians the worry of earlier-than-expected retirement is often short lived as the overarching nature of financial planning is to aim for the best but plan for the worst. The impacts of Ill-health, redundancy and a raft of other scenarios are financial planning staples factored into sound financial strategy spanning a lifetime.
For unadvised-Australians the uncertainty of early terminated income can change their retirement lifestyle. Sometimes considerably.
Feeling in control is important
We didn’t need survey findings to tell us that a sense of financial control (or lack of it) has a direct impact on our emotional wellbeing.
We’ve written about this very topic previously and how financial pressure can make us feel, however the survey did quantify it – one in four retirees felt out of financial control at time of their retirement.
The unfortunate side-effect of financial stress often from feeling this way, is adverse quality of life.
Findings also indicated as many as seven in 10 who felt they were financially out of control at the time they finished work, also experienced negative emotions. Conversely, nine in 10 people who felt financially in control experienced positive emotions.
We’re sure you agree, feeling financially distressed is no way to begin your retirement.
Financial miss-steps aside, in our experience it’s often the case that people feel financially stressed when it’s not warranted. This is usually because they don’t have a clear understanding of their wealth position which hampers their ability to make confident financial decisions.
For advised-Australians (including our own clients) regular financial planning progress meetings are invaluable. They provide opportunity to reassure and clarify an individual’s financial position in context of their goals, and importantly, opportunity to act on any new information that may require a change of financial strategy.
Things change…
Your financial priorities change as you get older and as you make your way to retirement, your personal priorities change too.
The survey found that while younger Australians strive to be financially successful, overwhelmingly pre-retirees and early-retirees’ perceptions of success changed and their priority becomes a desire to be happy in themselves, closely followed by being able to do what they love every day.
Advised financial planning is lifelong and considers personal changes as well as the what-if impacts that inform, educate and create financial confidence and outcomes non-advised Australians often miss out on.
For us the most asked question is undoubtedly – Will I have enough to retire?
While there are no promises, however for advised-Australians financial planning, particularly when it includes financial modelling that considers setbacks and options for when they occur, it enables them to feel at-peace with financial means throughout their life and confident of the lifestyle they expect at the time of their retirement. In fact 52% of advised pre-retirees felt confident they would have enough to retire, compared to just 26% of non-advised pre-retirees.
The quantified value of advice
In 2021, a different Australian study revealed a quantified average advised outcome of 5.2% per annum better investment portfolio performance than non-advised outcomes (this figure takes into account a broad spectrum of benefits achieved over a client’s lifetime). You can read more about in an earlier article, here.
Overall, studies such as these indicate those individuals with an active financial advice relationship benefit from better financial outcomes, but perhaps of greater value, were happier and financially confident, avoided the high levels of financial stress experienced by non-advised individuals, and generally enjoyed a higher quality of life.
Next steps
For our clients reading this article, we trust you feel reassured that your proactive approach to planning your financial life will enable you to achieve the goals and outcomes that really matters to you. However, may we remind you to let us know when changes occur as there is often there are flow-ons which can affect expected outcomes.
For those non-advised readers (perhaps the adult children, friends or associates of our clients) we hope we have provided compelling reasons for you to take steps to explore financial advice and the benefits of a qualified advised-approach.
To discuss your financial planning requirements, please contact Brett Cribb, Steve Nicholas or James Marshall on +61 (0)7 3007 2007, alternatively email info@stratusfinancialgroup.com.au, and let’s make it happen.
Stratus Financial Group helps professionals, executives, business owners, families and retirees manage their complex financial affairs and coordinate their professional advisers.
Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This is general advice only and does not take into account your objectives, financial situation or needs, so you should consider whether the advice is relevant to your personal circumstances. You should also read the relevant Product Disclosure Statements (PDS) before making any financial decisions.
References:
[1] Australians who engage a financial planner have a better quality of life.https://fpa.com.au/news/australians-who-engage-a-financial-planner-have-a-better-quality-of-life-fpa-launches-inaugural-value-of-advice-index/#:~:text=The%20VoA%20compares%20perceptions%20of,how%20Australians%20value%20financial%20advice
[2] 2021 Value of an Adviser Report – Russell Investments
https://russellinvestments.com/au/financial-advisers/your-business/business-solutions/value-of-an-adviser