MEDIA RELEASE: Australians approaching retirement are increasingly interested in receiving advice from a professional financial adviser, according to the findings of the latest study by Fidelity International into retirement planning.

In its report, New Life Old Life, Fidelity surveyed Australians* aged over 45 to explore when they planned to retire, what they thought retirement looks like, and how they are preparing for this phase of their lives.

The report shows that four in five pre-retirees currently receive advice, have received advice in the past, or would consider receiving financial advice. And, of the pre-retirees who have never received financial advice, three in five are open to it.

The preferred professional to seek advice from is a professional financial adviser, with more than twice the number of respondents saying they would seek professional support from a financial adviser rather than an accountant. Professional financial advisers are also preferred over employers as a source of information, by a factor of more than five to one.

Richard Dinham, head of client solutions and retirement at Fidelity, said there is growing recognition by pre-retirees of the value provided by a professional financial planner.

“Major life changes such as retirement are challenging. Our research shows that pre-retirees approach retirement cautiously, wary of the number of uncertainties around this unknown period of life.

It’s clear that a key driver of a positive emotional experience at retirement is a sense of control in the decision. And while financial matters are not the only factor to take into account, there is no doubt that they have an important role to play in ensuring a feeling of control.

The challenge for advisers is therefore to understand what risks need to be managed for pre-retiree clients and what that means for advice practices, portfolio construction frameworks and investment decisions.

An effective plan will help pre-retirees envisage an optimistic future and provide action steps to improve the probability of achieving it.”

According to the report, advised retirees say they live more consistently within their values, are more financially capable and resilient, have a greater sense of meaning and purpose, and are less socially isolated than the unadvised.

“With so much evidence of the intangible benefits of advice, there is a strong argument that financial advisers should embrace the drivers of quality of life and intentionally enhance the client’s sense of purpose, financial capability, resilience, sense of control, day-to-day emotional experience and social interaction,” Mr Dinham says.

“And it appears pre-retirees are expecting it. In fact, according to our research, most expect their adviser to discuss more than money.”

Overall, three in four pre-retirees believe that a financial adviser can play a role in aligning their financial decisions with their values. Similarly, three in four pre-retirees also believe a financial adviser can help them make more confident financial decisions and enhance their quality of life in retirement.

Further, the majority of pre-retirees believe financial advisers can play a role in building their emotional resilience to withstand major life changes in retirement.

But for pre-retirees to benefit from advice, it first needs to be accessed, Mr Dinham points out.

“There are several hurdles on the supply side of the financial advice market as well as the demand side. Understandably, the main reasons pre-retirees are not currently seeking financial advice relate to a lack of affordability.

Almost one-third of respondents (three in 10) say they don’t feel they can afford financial advice, and one in four says they can’t justify the cost. Others don’t feel their circumstances justify the need or would rather do it themselves.

“It appears that advice is being priced out of reach of the people that could benefit most,” says Mr Dinham.

“Advisers can address the cost barrier in three ways.

First, they can reduce upfront fees and recoup the shortfall over time with an ongoing relationship. This is not ideal in a professional practice, introducing conflicts that may not be in the client’s best interest.

Rather, it’s preferable that each client assignment is profitable, so a second option is for the adviser to withdraw services and not offer them to price- sensitive prospective clients.

The third course of action is to address the information asymmetry: building the client’s understanding of the value of the advice to their circumstances.

Our research shows that if the adviser can show the client that they can address their greatest concerns, they will be more willing to pay their professional fees, which means more Australians will be able to access the advice and support they need to achieve a comfortable retirement.”

* The research involved an online survey of 1,207 Australians over 45, with fieldwork undertaken in August 2022, for Fidelity International by independent research firm MYMAVINS. Respondents included pre-retirees working full-time and in the peak of their careers (n=395), semi-retirees and those transitioning to retirement (n=366), and early retirees (n=446).

Retirement can be considered a state of mind. So, for this study, respondents self-categorised as pre-retirees, semi-retirees or retirees. However, one group was categorised by the researchers: respondents over 50, working less than full-time, were classified as semi-retired. Early retirees have all retired within the past 10 years (regardless of age).