Recent political events have made millennials more financially risk averse, with 44 per cent spending less than six months ago and 48 per cent considering changes to their investment strategy, new research from micro-investing platform, Raiz Invest, has shown.
The firm asked more than 1,000 young Australians about changes in spending and savings habits, as well as trust in major institutions around personal finances – including superannuation, savings and investment funds – to uncover the impact of these major events on their behaviour.
Nearly one in three mistrust their financial institutions with their superannuation, with a third remaining neutral. A quarter of respondents no longer trusted financial institutions with their investment funds.
Raiz Invest managing director, George Lucas, said that repeated leadership spills, continued investigation into the big banks, insurance and super regulation have all unsettled Australians, causing them to call into question where they invest and deposit their savings and assets.
“It is not a good outcome for the entire financial services industry, including Raiz, with all institutions and fintechs being tainted by the revelations in the Royal Commission,” Lucas said.
The research found that 51 per cent of millennials consider themselves risk averse when it comes to investing. One in ten described themselves as extremely risk-averse investors.
Raiz Invest also found that, since the Royal Commission into financial services, the majority still are not ready to consolidate superannuation into one fund, with 22 per cent stating that they believe it’s better to spread the risk across a few funds and 34 per cent admitting to being ill-informed on such matters.
“The high number of risk-averse millennials correlates with the idea of disillusionment in financial institutions. It is not surprising that they still are reluctant to consolidate their superannuation into one financial institution but would rather spread the risk,” Lucas said.
“We’re seeing the games in Canberra having a real affect, with 58 per cent of millennials either saving more or spending less as confidence in politics shrinks. We are also seeing real impacts from the Royal Commission, with outcomes that may not benefit the average Australian, like more expensive financial advice or making it harder to obtain a home loan.
“Millennials need to continue the trend of saving and investing and improving their financial literacy early to meet the changing landscape of financial services in Australia.”