Generation Y are disengaged with both their superannuation and financial planning advice, relying on their employers to choose their super fund and on their families for investment advice.
According to two pieces of research released today by REST Industry Super and RaboDirect, peopled aged 18-30 are taking little active interest in where their superannuation is invested or in tailored professional financial planning advice.
The REST survey, which covered 1007 people aged 18-30, found that more than half allowed their employer to choose their superannuation fund while 80 per cent were not clear on what fees were charged by their super funds.
The high levels of disengagement were also reflected by lack of knowledge about how their superannuation was invested, with nearly 84 per cent admitting they had little or no idea how their fund had invested their superannuation.
“I doubt any 18 to 30-year-old would let his or her employer choose them a car, yet nearly half don’t take an active interest in choosing their superannuation fund, soon to be worth many times more than the average first car,” REST chief executive Damian Hill said.
The REST survey also found that around one in three read their super statements, with another one in three never reading them. A third of survey respondents were unaware of their superannuation balance.
This lack of knowledge was reflected in the 2013 RaboDirect National Savings & Debt Barometer report which stated that only 13 per cent of Gen Y people relied on a financial adviser for advice, with family and friends the preferred source of advice at 33 per cent.
According to the report the cost of advice was the biggest barrier to seeking advice, with 60 per cent of Gen Y respondents stating using a planner would be expensive.
RaboDirect national manager Key Account Services Bede Cronin said this indicated a need to highlight the benefits of financial planning compared to the costs of obtaining it. It was encouraging financial planners to confront the perception that advice is too expensive and demonstrate the role they can play in developing long-term strategies to deliver financial security.
