Younger Australians are shying away from using professional financial advisers in the wake of the Royal Commission and this could cost the broader economy dearly, investment manager Trilogy has cautioned.
According to data from Rainmaker, Australians aged 18 to 42 accounted for just 17 per cent of the financial planning industry’s customer base, despite representing 46 per cent of the adult population.
Unsurprisingly, the recent evidence of misconduct unveiled by the Royal Commission into Banking, Superannuation and Financial Services could be responsible for this, Trilogy managing director, Philip Ryan, believed.
Ryan also warned that the lack of trust in advice by younger people could prove to be a costly impact of the Commission on the broader economy.
He said that a lack of guidance and poor understanding of economic fundamentals and personal risk tolerance could lead to poor financial decisions that could compromise individuals’ financial futures. This in turn could put pressure on public funds as those Australians hit retirement age without adequate savings.
“The reluctance shown by younger generations to seek out advice comes as fallout following the damning assessments of financial advisers operating under the umbrella of some of our biggest – and most trusted – institutions. This distrust has real potential to derail our financial future,” Ryan said.
“Australians of all ages and all walks of life should be investing in their financial education and the value of engaging a reputable adviser to help plan for the future cannot be dismissed.”
Ryan acknowledged, however, that the financial advice industry needed to work to restore the public’s confidence in the profession, saying that “the anger and frustration shown by the Australian public is completely understandable”.