Lack of Planning For Retirement and Poor Knowledge of Superannuation Presents a Problem For The Wealth Management Industry and Government
Announcement posted by Roy Morgan Research 06 Jul 2011
27/06/2011
Over 7.5 million Australians who have superannuation (66%) have not started planning for retirement, including over 1 million in the critical pre-retirement (50-64) age group. This combined with the fact that knowledge of superannuation is fairly poor, with only 46% of those with superannuation regarding themselves as “Very Knowledgeable” or “Fairly Knowledgeable” about the subject, presents a problem to wealth managers and the Government to get people more involved in planning for their own retirement. These are some of the latest findings from the Roy Morgan Research Retirement Planning Report which has just been released.
The chart below shows that even amongst those who have superannuation, only around a third (34%) have started planning for retirement and although this increases with age, it only rises to 63% in the pre-retirement age group (50-64).
Have Started Planning For Retirement
-(1).aspx)
Source: Roy Morgan Insights Series 2011: Retirement Planning Report 2011. Total includes those aged 65+, n = 1,597.
With superannuation intended to be the main retirement funding vehicle for the workforce in the future, it is important that those with it, have a good knowledge and feel confident about it.
Currently, less than half (46%) of those with superannuation feel that they are knowledgeable on the subject (either “Very” or “Fairly” Knowledgeable).
Although knowledge of superannuation increases with age, it is still relatively low, even for the pre-retirement group (50-64) where only 59% feel knowledgeable to some extent.
Feel Knowledgeable* About Superannuation
-(1).aspx)
Source: Roy Morgan Research Insights Series 2011: Retirement Planning Report 2011. Total includes those aged 65+.
*Feel “Very” or “Fairly” Knowledgeable About Superannuation, n = 1,597.
With a generally low level of overall retirement planning and knowledge of superannuation it will become increasingly important that people with superannuation make more use of professional financial planners.
The survey showed that around 40% of those with superannuation had used a financial planner, with this rising to 59% in the pre-retirement age group (aged 50-64).
Have Used A Financial Planner
-(1).aspx)
Source: Roy Morgan Research Insights Series 2011: Retirement Planning Report 2011. Total includes those aged 65+n = 1,597.
Norman Morris, Industry Communications Director, Roy Morgan Research says:
“Amidst the debate in the industry regarding the Future of Financial Advice (FoFA) reforms and the proposed ban on commission payments on superannuation, our study has shown that the vast majority of those who have used a financial planner for their investment or superannuation needs have felt satisfied with the value they have received for the service.
“Amongst respondents, there was a relatively even split of those who paid for advice through a commission agreement (42%) and those who paid under a fee for service arrangement (40%). What we have found however, is that there was very little difference between how each segment rated the value of advice they received.
“The large number of people who have not used a financial planner, or are not in an active advice relationship, continues to reflect a level of apathy in the market towards financial planning that planners have not yet been able to overcome.
“How financial planners overcome this lack of interest, and demonstrate the value they offer to both potential and unengaged clients may prove to be their biggest challenge over the coming years, as debate about remuneration structures continues and the image of financial planners remains relatively low compared to most other professions – according to the Roy Morgan Research Image of Professions Survey 2011.”