Viewing Retirement Planning as More than Money

According to the recent ‘New Life Old Life’ report by Fidelity International, four in five pre-retirees either currently receive financial advice, have received advice, or would like to receive advice. Financial advice yields both tangible and intangible benefits, and can enhance well-being in retirement. We have some data and insights that may help financial planners with the nexus between retirement planning and quality of life.

Financial advice and Mental Well-being

CoreData’s research on ‘The Value of Advice’ for Fidelity International was based on survey results of 2,228 Australians. This survey reported an interesting perspective that Australians have about money. This survey also highlighted how financial advice is valued by Australians. Here are the key insights from this survey:

Australians’ and Money Worry

• Around two-thirds of Australians were worried about money, regardless of their financial stature.
• Two out of five Australians with $1 million in invested assets say that they worry about money at least once a month.

Financial Planning Gives People Peace of Mind

• The study showed that nine in ten people who consult with a financial planner experience peace of mind regarding their finances.
• Similarly, nine in ten people who seek financial consultancy feel that they are more in control of their finances.

Financial Planning Improves Mental Well-being

• Around 50% of Australians who receive financial advice report that it benefits their mental health.
• 4 in 10 Australians state that receiving financial advice has had a positive impact on their family life.
• 1 in 5 people say financial advice has had an improving effect on their physical health.

These insights show that people have a positive experience with financial advice. They are also willing to bear the cost of financial advice as more than seven in 10 Australians who receive financial advice believe that the value they get from financial advice outweighs the fee.

Well-being in Retirement: A New Perspective

CoreData with its BRP Index or the Best Possible Retirement Index has attempted to produce a measurable scale for Australia’s retirement well-being. The index scores retirement preparation from 0-100, with 100 being perfectly prepared and satisfied.

According to this scale, income is not the only determinant of a satisfactory retirement life. Here are some of the main drivers that impact retirement well-being amoungst Australians:

Home Ownership

• Retirees who own a home score 25 points higher on the BRP index than those who don’t.

Financial Planner Relations

• Retirees with an active relationship with a financial planner score 15 points higher than those who don’t have one.

An increase in the Superannuation Guarantee to 12 or 15 percent might be important for financial security, but certain non-financial aspects of retirement need to be considered in policies.

Final Words

Although financial planning can yield great benefits and this is broadly being recognized, most people are not seeking out a financial planner. People believe financial advice is expensive. We believe the QAR (Quality of Advice Review) and three streams to be implemented will make advice accessible to more people. Nevertheless, financial planners in Australia are faced with increasing costs of business, particularly wages.

By outsourcing professional paraplanning services, financial planners can significantly cut down on costs, paying only for output. By ensuring they use a great paraplanning company with genuine know-how, this won’t be a false economy, that ultimately costs more and doesn’t deliver a sustainable solution.

At Mutual Paraplanning Services, we work on retirement planning daily from pre-retirees to retirees, to aged care advice. Feel free to contact us to find out more details about how we assist financial planners in the client’s retirement advice documents. Well considered retirement planning can have a real impact on quality of life and mental well-being in retirement.