Advice failures deter retirees

Lack of trust from previous product and advice failures was continuing to deter retirees and pre-retirees from seeking professional financial advice, StatePlus said.

The financial planning business' general manager, marketing and financial planning, Jason Andriessen, said the firm's own research showed significant barriers continued to exist that made individuals wary of engaging with a financial planner.

"The main reasons for that are the lack of trust from previous product failures and advice failures, a fear of how much it will cost, a fear of being embarrassed by previous decisions, a fear of getting bad news, and a perspective that their circumstances aren't complex enough, so it doesn't warrant meeting with a financial planner," Andriessen said.

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He said associations like the Financial Planning Association (FPA) needed to hold members and financial planners accountable for poor behaviour in order to regain trust in the industry.

He suggested digital advice or robo-advice was an effective tool to engage with prospective and clients, and increase their financial literacy by informing them of their options to increase their confidence.

He also noted differences in the way clients should be serviced by advisers: while high net worth clients focused on maximising yield, managing taxation, and optimising returns, middle Australia clients wanted to balance their present lifestyle while focusing on long-term financial goals.

"So they're expecting to spend down their capital but they need to do so in a responsible way. In middle Australia, inflation is still the number one cause of retirement ruin, running out of money too early. But how do you balance that so that you don't go without today?" Andriessen said.

He also noted few clients actually reached retirement having dwindled their savings, and many had unnecessarily sacrificed luxuries to save money.

"If you ask them, if they knew back then what they know today, they say well actually I would've taken that trip or I would've retired a little bit early to do the things I wanted to do rather than go without," Andriessen said.

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