Retirees primarily use financial advisers as their source of information but look at a wide range of sources for their financial management needs, according to the 130,000-strong National Seniors Australia group.
In a 2017 study involving over 5,000 NSA members, Seniors more savvy about retirement income, 59 per cent reported getting information on retirement from their financial adviser but only 12 per cent used it as a single source, with the complexity of the retirement system forcing people to use their super fund, Centrelink, their bank or family and friends for guidance.
Advisers need to be far more aware of how their advice is part of an ecosystem, says NSA chief advocate Ian Henschke.
In its recent submission to the Retirement Income Review, the NSA referred to their earlier report to highlight the complexity of the retirement system and the value of financial advice to retirees.
National Seniors believes most people would not have sufficient knowledge and understanding of the retirement income system without some form of help, the submissions stated, before noting that retirees would be unlikely to achieve desired outcomes without formal financial advice.
Yet advisers are rarely seen as the single source of truth by retirees.
Sites like ours, government information sites such as Centrelink, their super funds, as well as family and friends all were cited as sources used to inform their decisions, Henschke says.
The NSA argue in its submission that third party expertise is particularly important in Australia because our retirement system privatises responsibility. As the superannuation system matures, this reliance will only grow, hence the importance of advisers working together with other information providers cater to these needs.
Nine per cent of respondents in the 2017 report said they didnt need financial information for retirement, and 25 per cent said they only used a single source of information. The majority of those that only used a single source used a financial adviser.
The average age among member participants was 68. Most were retirees, Henschke explains, but retirement is not a pre-requisite for NSA membership, which costs $45 annually.
Only a handful of respondents relied on any one of the other sources as their sole source of financial information about retirement, indicating that older Australians are weighing their options and doing research before making major decisions, the report stated.
It went on to compare financial advisers to medical professionals, saying NSA members chose these types of authoritative intermediaries as sources of health and lifestyle information.
The use of financial advisers remains high and their ability to deal with changing retirement benefits and rules is critical, not just in finance matters but in care choices which are also complex and dependent on good financial advice, it states.
A separate January 2020 NSA report, Retirement income worry: Who worries and why, took a deeper look into the mindset of retirees in terms of their retirement income. Comments on financial advice were mixed, the report states, but indicated broad satisfaction.
Looking closer at the impact of the sources and sufficiency of advice, we can see that respondents thought that financial advisers made a positive impact.
*To register for the 2020 Retirement Conference in Sydney on March 31, presented by Investment Magazine, Professional Planner and the Financial Planning Association of Australia, visit here.
Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning.
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Advice crucial, but not the only source of truth: NSA - Professional Planner