MEDIA RELEASE: Sydney, 30 January 2020: The mental health, family life and physical health of a large proportion of Australians are being adversely affected by financial issues, new research from Fidelity International has revealed.
Fidelity International’s ‘The Value of Advice’ report, based on a survey of 2,000 Australians, aims to take a pulse of Australia’s financial and overall wellbeing and highlight the positive impacts of financial advice beyond potential monetary gains.
It showed that for more than half (52.8%) of Australians financial issues had impacted their mental health, while other negative impacts included relationships with family and/or friends (48%) and physical health (37.3%).
However, while the report showed that many Australians recognise the benefits of financial advice – 49.9% of those receiving advice reported improved mental health – many aren’t seeking professional help in the way they would access other services to support their overall wellbeing.
More than three-quarters (77.3%) of Australians have seen their GP to address personal wellbeing issues, and more than a third (35%) have been to see a mental health professional for the same reason. This compares to 24.4% who have seen a financial planner.
Alva Devoy, Managing Director, Australia at Fidelity International, said it is clear there is strong link between financial security and overall wellbeing. “Almost three-quarters of Australians say they worry about money at least monthly, and just under one-quarter worry about it daily,” she comments. “And it’s not just those who might be thought of as ‘financially disadvantaged’. Almost 40% of Australians with at least $1 million of investable assets say they worry about money at least monthly.
“This kind of mental stress has a direct impact on health and happiness. But surprisingly, many people don’t ‘join the dots’ and realise that addressing financial issues is a step towards improving overall wellbeing. As an industry, we have more work to do to highlight the benefits we can provide to people’s lives.”
The report also revealed some of the key concerns for Australians when it came to their finances:
· Around one in three (35.9%) would not be financially stable if their relationship/marriage ended tomorrow
· Almost three quarters (73.8%) would not be financially stable if they were to lose their job tomorrow
· More than half (55%) of pre-retirees think they will have to keep working past retirement age, while 52.6% worry they might not be able to afford to live where they want in retirement.
“It is concerning that more Australians aren’t aware of the benefits that financial advice can bring, not just to their finances but to their overall quality of life,” Ms Devoy says. “People often seek advice due to a life event or milestone such as retirement but those who receive advice then go on to report the benefits are much wider reaching. These include being able to live their desired lifestyle, not having to worry about money, improved mental health and better relationships with their family and friends. This makes it clear that financial advice does more than help with just their financial wellbeing.”
“Our research showed a recurring theme is that people who have never received financial advice find it hard to justify the cost,” Devoy comments. “More than a third of Australians who’ve never sought advice say they can’t afford it. Additionally, of those who’ve never received advice, more than a third believe that their circumstances do not justify it.
“The challenge for the financial advice community is to find ways to show prospective clients that the benefits will be worth the outlay. To do this, we must prove to Australians the broad value of advice.”
Fidelity’s research identified four groups, providing insight into what motivates people to seek advice; what they are looking for in the advice relationship; and how they prefer to interact with their adviser. The four client groups identified are:
These clients think big-picture and beyond the horizon. They focus on competency and trust to solve their specific complex requirements. Approximately one-third of clients can be defined as celestial navigators. They are generally reasonably affluent individuals on the home stretch to retirement and tend to funnel most of their financial decisions through their adviser.
These clients want here-and-now issues pinpointed with accuracy. They focus on evidence of value for money and transparency in cost and benefits. They seek to maximise returns while minimising fees, but don’t necessarily want the cheapest service available. They use their adviser for high-level advice and as a critical source of information and decision-making support.
These clients require more intuitive guidance, with human interaction. They focus on building rapport and are looking for a trusted partner. They are often younger with average to high disposal income, and less likely than the general population to have children. They typically use financial advisers to help them consider what they don’t know and provide some peace of mind that they are on the right track.
These clients want to be pointed in the right direction. They focus on low/scaled fees and often worry about money. They often have restricted budgets and are just starting out on their career but want help to grow and manage wealth and to help solve specific ‘problems’ they have identified. They are most likely to have a short-term, transactional relationship with their adviser.