Posted in Preparing for the Unexpected.

Are You Better Off with Savings Advice?

It is difficult for us to prove that our financial adviser services are worthwhile so we were pleased to see the following media release from The Financial Services Council, the peak body representing Australia's retail and wholesale financial services industry for funds management, superannuation, life insurance and financial advice businesses.

Savings16/02/2011

Aussies are Better Off with Savings Advice

The Financial Services Council today released independent research showing people who receive financial advice will be almost $100,000 better off at retirement simply through learning better savings behaviour.

The Council's research shows a 30-year-old would save an additional $91,000, a 45-year-old would save an additional $80,000 and a 60-year-old would save $29,000 more than those without a financial adviser.

These amounts are conservative, do not take into account the additional benefits of comprehensive investment advice and are on top of the $594,000 the Government estimates an average 30-year-old will have in their superannuation when they retire.

The research, commissioned by the Financial Services Council and conducted by KPMG Econtech, provides an analysis of how financial advice affects savings behaviour. It shows that those with a financial adviser save an additional $1590 a year after advice costs compared to those without a financial adviser.

John Brogden, CEO of the Financial Services Council, said the research was compelling and demonstrated the significant value of financial advice in ensuring Australians saved more.

"Quality financial advice has the ability to change an individual's savings behaviour and encourage greater financial discipline, no matter what their age or level of income," Mr Brogden said.

"It is therefore critical that we get the Future of Financial Advice reforms right. The Government will have done all Australians a great disservice if the reforms make quality financial advice less accessible."

The research also considered the level of life insurance held by those with and without financial advisers. It found that, on average, those with a financial adviser were at least four times more likely to hold some form of life insurance.

This is supported by industry studies, also compiled by KPMG, which show those who received financial advice had on average $260,000 worth of life insurance cover compared with only $100,000 for those who purchased insurance directly.

"Given 95 per cent of working Australian families do not have adequate levels of life insurance1, increasing access to advice is critical if we are to help more Australians adequately protect their families from financial hardship," Mr Brogden said.

About the research

1. Lifewise/NATSEM Underinsurance Report 2010