New research from the Association of Super Funds of Australia (ASFA) found that Australians under 35 are 10 times more likely than those aged over 65 to consult social media for information about retirement.
The research also revealed that only half of all Australians aged over 18 have consulted any source of information about retirement at all. While that share rises with age, it does not rise by much, meaning a large number of Australians approaching retirement are making decisions with little to no guidance.
The research measured both how much Australians trust each source of information and how often they use it.
Across all age groups, the most trusted sources are professional advice services (financial advisers), advisers provided by super funds, and industry benchmarks such as the ASFA Retirement Standard. Social media is consistently the least trusted.
The sources of information Australians rate as the most trustworthy are not the ones they use the most. The clearest example of this is advisers provided by super funds: Australians across every age group place high trust in these advisers, but few make use of them until they turn 65.
ASFA chief executive Mary Delahunty said the findings indicate the current system settings are not ensuring advice gets to those who need it, and that the problem is one of access to advice rather than the trustworthiness of advice.
“Australians know which sources of retirement information they can rely on. The problem is that the sources they trust most are often the hardest for them to reach,” Delahunty said.
“Barriers like the cost of accessing an adviser outside of super, and limitations on the scope of advice that can be provided by super fund advisers, really get in the way of people getting the trustworthy information they need.”
Delahunty said these access problems are worst for younger Australians, who are turning to social media for information even though they trust advisers much more as a source of information.
“This, added to the fact that half of all adults have not sought any information about their retirement, is a strong signal to the industry and policymakers that the current settings mean advice isn’t reaching people where they are in life,” Delahunty said.
The research also points to structural problems with the financial advice market. The number of licensed financial advisers is around 40 per cent lower than a decade ago, while the number of Australians with a super account is around 20 per cent higher over the same period. Fewer advisers are serving more people with superannuation.
According to ASFA, the cost of not being advised is not spread evenly between age cohorts. The value of good advice is greatest for younger Australians, who have the most time for decisions to compound.
For a 30-year-old on average wages, an extra quarter of a percentage point in annual investment returns means around $40,000 more at retirement. For a 50-year-old, the same difference is worth about $7,000.
“With 40 per cent fewer financial advisers than ten years ago, and more Australians in the super system than ever, the case for progressing legislation to let funds provide more advice has never been stronger,” Delahunty said.
The findings strengthen the case for progressing advice reforms, through Tranche 2 of the Delivering Better Financial Outcomes (DBFO) package, as a priority.
“The advice Australians trust most sits inside their super funds, but current settings make it hard and costly to deliver. Making the super system simpler, with easier access to trusted advice, would change that,” Delahunty said.
