Australians need to embrace wise financial planning

Australians need to embrace wise financial planning
Australians need to embrace wise financial planning

There’s a new wave of financial services migrating beyond the computer and onto phones and tablets, as well as moving into social media such as Facebook.

But as these services migrate onto a device that fits in the pocket, people still need something more.

In my current business, Yellow Brick Road, we’re opening branches at a rate of one per week nationally, simply because people still want face-to-face discussions about their affairs.

The key, in my opinion, lies in the difference between the financial services you can turn into a “product”, and those you cannot.

People are happy to use financial products, but they really want advice.

The Nielsen Pacific Global Survey of Investment Attitudes was released a few weeks ago: 70% of Australians used the internet for banking and investment transactions in the previous three months. But the same survey also found that 54% of Australians had visited a physical bank branch in the previous three months.

This shows a nation that is using products but still need to be able to talk about more complex matters such as mortgages, life insurance and super.

It’s a quaint picture of a technology-driven country with a traditional heart. But the problems are in fact, far from quaint. An example of this could include our superannuation system, which puts the onus for retirement investment on the individual.

The first port of call for most people with super is not an advisor, but a product. The super fund member is mailed a brochure with describes the various products and the member ticks the boxes and sends it back.

The Nielsen survey showed just 16% of Australians currently rely on a financial planner or adviser, while 57% preferred to be in charge of their investment decisions.

Now consider the fact that 70% of investment-focused Australians currently maintain a shareholding of stocks, the worst performing assets.

I believe there are many forces that have pushed Australians away from being advised on their investments and their retirements.

Most banks don’t offer advice unless the customer is a wealthy “private client”; stockbrokers don’t give you the full service unless you have a certain amount to invest; and the superannuation funds have become the product.

That leaves the independent advisers and planners, who many Australians avoid because there is either a trust problem or the costs are perceived to be too great.

More should be done by the superannuation industry, the ASX, the government and regulators to encourage people to seek advice around complex and crucial financial arrangements.

However, people have to show some initiative in these matters and decide what’s really important. Most people who seek expert advice get something out of it: an insurance broker reducing your premiums; an adviser finding a lower fee super fund; a mortgage broker finding you a better loan or an accountant getting you a better tax result.

Aussies need to rethink how they balance financial products with advice. A product fills a need; advice is planning for life.

Mark Bouris is executive chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting and tax, and insurance.

Mark Bouris

Mark Bouris

Mark Bouris is executive chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting and tax, and insurance.

Community Discussion

Be the first one to comment on this article
What would you like to say about this project?