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Planners

first_imgYoung people have way too much to think about these days. Even youngsters who have only just begun their working life are expected to know about superannuation, top-up limits and co-contributions. They’re expected to be responsible now for their retirement in forty years’ time. How did we get here? In 1992 the Superannuation Guarantee required all employers to put a mandated percentage of an employee’s salary into a super fund. The super guarantee could not be accessed until the worker retired. So, the onus for retirement shifted from the government and employer, to the employee. And the quality of retirement for those in their twenties and thirties, will be their own responsibility: the amount of retirement income they accumulate will depend on investment decisions made now. The best time to build a nest egg is precisely in those years when you least want to think about it. Because super is a forty-year investment, small increases to contributions and slight changes in what kind of fund you use at the beginning of the journey, can have a big impact at the retirement end. Also, the very people who could be helping young people with advice – financial planners – are moving away from their old commission structure, to a fee-for-service model. The fee-for-service model means the client pays for the level of service they receive. And because young people have less money, and are less engaged with retirement planning in general, young people don’t go to planners. This creates what some people call a ‘service gap’ which could cost people tens of thousands of dollars at retirement. We know from our own research that young people want advice about retirement, but they do not use planners. Last year we polled 500 young people from Sydney, Brisbane and Melbourne, aged 25-34 years. When asked how interested they were in planning for their future, 92 per cent answered either very interested or somewhat interested. When asked if they plan on seeking advice to discuss their financial goals, around a half answered ‘yes’. This means that a huge majority of young people want to set themselves up for the future but only half of them want to access the right advice. This is an important insight because financial planners don’t just help select the right super funds to invest in, they also set-up the associated aspects of a person’s present and future wealth. They attend to the whole picture, something younger generations are not experienced about. The investment options people nominate when they are not advised, is illuminating. When asked what they’d be most interested in investing in, 51 per cent said the share market which is currently quite risky and volatile. So the question has to be asked: why do young people feel more comfortable with a volatile investment class than they do with professional advice? It’s an issue that has to be resolved if the self-funded retirement system is to work properly. Talk to me on Facebook at www.facebook.com/ybrwealth or on Twitter at @markbouris. Let me know what you think. * Mark Bouris is the Executive Chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting & tax and insurance. Email Mark on [email protected] any queries you may have or check www.ybr.com.au for your nearest branch. Facebook Twitter: @NeosKosmos Instagramlast_img

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