Australian retirees vociferous with advice

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Australian retirees are more strident in their investment advice for younger generations than their global counterparts, new research has shown.

Seventy-two per cent of retired Australians believe a long-term approach to retirement saving is needed, compared with only 55% globally, the Global Investor Pulse Survey by investment manager BlackRock found.

“I would say the surprising thing was the degree to which retirees would advise the younger generations as to what to do to accumulate wealth. They were very outspoken as to what they would do differently,” BlackRock managing director Mark Oliver told Wealth Professional.

He puts this down to Australia having created a community with an engaged investor base.

“Here, we’ve had a generation of retirees which has been more involved in their wealth accumulation strategy, given Australia has had superannuation guarantee for a number of decades.”

The older generation’s advice to the younger is to start investing early, pay down debt, and use a professional’s advice, he said. But despite a high recommendation to use a professional’s advice, not many Australians are doing so.

Only 15% use a financial adviser, and not surprisingly, income plays a key role. Twenty-five percent of those who earn in excess of $150,000 (or with household income in excess of $160,000) use a financial adviser, compared with only 10% of those on lower incomes.

A good thing to keep an eye on is issues that concern both affluent and less affluent investors, said Oliver.

More affluent investors were concerned about macro-economic issues, particularly domestically, and less affluent were more concerned with immediate income and expenses.

While this in itself is not surprising, what is interesting is comparing the positioning of investor portfolios – particularly with SMSFs which tend to represent the more affluent – and affluent investors' concerns about the local market, Oliver said.

“What are they doing about it, are they starting to invest offshore? And we are starting to see that. Given the strong home bias that many SMSF have, and investors’ concern about the local economy, what will they do? That will be an interesting thing to watch, going forward.”
  
The survey of 17,600 respondents, including 1,000 Australians, was commissioned by BlackRock – the world’s largest investment manager – to test consumer attitudes and opinions about savings, investments and superannuation.

Findings:
  • When asked to rank their top concerns about their financial future, the state of the Australian economy was number one, followed closely by job security and having to spend more than they earned. Priorities differed with income.
  • Of the 15% of Australians that use a financial adviser, two thirds feel positive about their financial future, compared with only half of Australians in general.
  • Financial advice use was highest among the 55-64 age bracket, or those approaching retirement.
  • Investment property ownership in Australia sits at 15% of those surveyed, whereas European and North American averages are at 10%. For more affluent Australians the rate of ownership increased to 35%.
 

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