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We're in the money: Empowering the next generation through advice


Australia's superannuation sector has recently topped $3.3 trillion in funds under management. But there's an even bigger game in town; one that outweighs both the Australian economy and super itself.

Financial advisers are currently navigating a massive shift of generational 'Boomer' wealth, estimated at almost $3.5 trillion, according to Griffith University. This wealth transition is helping to redefine the traditional profile of an advice client, with more women and young Australians than ever seeking financial advice, particularly amongst Gen Z and Millennial investors, based on AUSIEX reserach.

The changing faces of advice clients bring with them new needs and new challenges. That means the role of advice is changing to be much more than the old safe zone of retirement planning - and as our roles as advisers change, so to do our responsibilities in our clients' financial decision-making processes.

Recent research of 3000 Australians by Your Financial Wellness, in partnership with Aware Super, shows an alarming rate of financial stress in Australia. What does that look like? For starters - more than half us worry about paying our monthly bills.

A lack of financial literacy is one of the identified challenges for young Australian workers. Only two in five men were able to answer basic financial literacy questions posed through the research. For women, the result was even more confronting at only one in four.

It's perhaps not surprising that almost a third of women reported high levels of financial stress - and the news doesn't get any better with women having, on average, about half the amount of super as men.

While the financial power of women and young Australians is steadily increasing, the research clearly identifies that they don't know where to turn to improve their financial know-how.

They have a thirst for financial knowledge and are actively looking for help. It's that demand for information that's given rise to the growing 'finfluencer' trend, with many young Australians in particular turning to social media for tips and insights on how to manage their money and build a comfortable future.

While it is great to see more young Australians engaging with their finances, we need to ensure they are getting the right advice from a qualified professional who has taken the time to understand their financial position, goals and risk appetite.

We need to make sure professional, personal advice is accessible and front of mind and help clients and their families understand the value that personal advice can bring to their financial wellbeing and retirement outcomes.

What women and young investors are telling us is that they want an adviser who educates, informs, coaches, and guides. They want to be empowered to make better financial decisions. We also hear the same feedback from 'traditional' clients, who increasingly want a 'do-it-together' approach, sharing the responsibilities with their adviser and being an integral part of the decision-making process.

More and more it's also about bringing the whole family on the journey to understand the impacts each decision will have on both short and long-term financial outcomes.

From our work with both our members and advisers, we have noticed some key themes emerging:

The impact of big life moments shouldn't be underestimated

According to the Your Financial Wellness research, women are twice as likely to note having children as a goal and a key motivator to organise their finances. Having children is one of life's big moments that can significantly impact on financial wellness and retirement outcomes.

For example, a 30-year-old woman who takes career breaks will need to either work until she is 70 or make additional contributions of more than $6000 each year for the last decade of her working life to close the gap in her super balance. Modelling of Aware Super members shows that on average women retire with almost $242,000 less super than men. Advisers are crucial in helping women to close this gap. Regular financial health and strategy check ins, particularly during key life moments, will ensure clients can enjoy life's big moments while protecting their financial futures.

Values really matter

Nine in 10 Australians believe our finance sector has a role to play in generating positive social, environmental, and economic outcomes, and 86% of Australians expect their savings and super to be invested responsibly and ethically. In fact, more than 70% of Gen Z and Millennials say they would save and invest more if they knew that their money would make a positive difference, when compared to Baby Boomers (31%), according to the Responsible Investment Association of Australasia.

Purpose shouldn't trump profit

Beyond a commitment to investing in a better world, more than 60% of Australians also recognise responsible investments can lead to outperformance. This is particularly true in super where Australian and multi-sector responsible investment funds outperformed mainstream funds over one, three, five and 10-year time horizons, continuing despite the COVID-19 disruption, RIAA shows.

At Aware Super, we have seen that responsible investing not only bolsters long-term outperformance but also mitigates long-term risks, including climate risk and unsustainable business practices. Working with women and young Australians, duration risk is also a crucial factor to consider.

Quality advice is an investment that can ensure a better future for clients at all stages of life. A future that builds on a foundation of financial confidence, security, and wellbeing for Australians and their families.

As more women and young Australians increasingly seek out financial support, we need to work together to ensure advice is accessible, inclusive and truly empowering to the next generation client. In a nutshell, the role of professional financial advice has never been so important.