The vast majority of Australian retirees have not sought financial advice during the coronavirus pandemic despite many believing their investments were at risk due to the economic downturn, a new study has revealed.
According to research by Allianz Retire+, four in five retirees felt their investments were at risk as a result of the coronavirus pandemic, but as many as 79 per cent of current and prospective retirees have not sought financial advice despite the economic uncertainty.
Almost one-third of retirees said they believed financial advisers were “for the rich” and around two-thirds of retirees without an adviser said financial advice services were too expensive to use.
Allianz Retire+ chief executive Matt Rady said: “We have to change perceptions of financial advice among retirees and increase access to affordable advice.
“The advice proposition is proven to be an integral part of providing individuals with confidence and certainty in retirement. Those who use an adviser told us they feel more confident and secure in their financial position.
“Sixty-eight per cent of those who were advised during COVID-19 said they are sticking to their financial plan. That means advice is definitely deterring people from making sub-optimal investment decisions based on fear or a lack of understanding.”
The study, based on a survey of 1007 current and prospective retirees across Australia, also found the economic impact of the pandemic was greater on prospective retirees, with 77 per cent of them believing superannuation would not provide them with enough money in retirement.
“Those nearing retirement have been particularly hurt by the downturn,” Rady noted.
“These investors tend to have more funds allocated to shares, so have higher susceptibility to market crashes. Typically, they are still working and need that income to build retirement savings.”
In addition, around two-thirds of retirees surveyed said they did not understand the investment options available in superannuation, with three in five stating they did not know where their super was invested.
“The survey shows too many retirees are confused about superannuation, don’t know enough about how their retirement savings are invested, or how secure their money is,” Rady added.
In May, the Association of Independent Retirees called on the federal government to assist self-funded retirees negatively impacted by the COVID-19 pandemic.
