The recent scandals in the financial advice industry has had a detrimental impact on confidence in the financial advisory process, according to a new report.
The RaboDirect Financial Health Barometer – A Five-Year Review found that in 2015, only 29 per cent of respondents agreed or strongly agreed that they trusted financial advice, down from 40 per cent in 2014.
The white paper also found that in 2015 almost twice the number of people now think that advice is “only for the wealthy”, compared to when the survey was conducted in 2012 (28 per cent versus 17 per cent).
However, Glenn Wealands, head of research and analytics at Rabobank Australia and New Zealand, said Australians did not need to be rich to enjoy the benefits being in control of their finances.
“In fact, it isn’t about what you have, it’s what you do with it that matters,” Mr Wealands said.
The report found that the bank balances of Australians could be on the decline due to falling consumer confidence levels.
The study, which covered a five-year period from 2011 to 2015, found that the more confident Australians were about their finances, the more likely they were to say they were completely happy with life, and actively grow their wealth.
Confidence levels peaked in 2013, but declined in recent years.
The report found a correlation between consumer confidence and consumers’ level of savings. Average savings in a typical month in 2014 was $908, falling to $705 in the 2015 survey – a decline of nearly 29 per cent. In 2014, 49 per cent of consumers agreed or strongly agreed that they were confident with their finances, a number that dropped to 45 per cent in 2015.
“The first Financial Health Barometer white paper has highlighted a growing need to reinvigorate Aussies' confidence in their finances,” Mr Wealands said.
“There is a real opportunity for all Aussies to become more informed about their finances to help boost their bank balances.
“Financial control is within the grasp of most people and it’s about taking simple steps such as paying down debt first, and seeking out an account earning a higher rate of interest with no account keeping fees.”
Worryingly, the research showed that the amount of money Australians think they will have to retire on is below industry estimates and declining.
“In 2012, Aussies were expecting to retire with $470,485 and in 2015 this amount dropped to $398,707,” the report said.
The report noted that the Association of Superannuation Funds of Australia estimates the lump sum needed to support a comfortable lifestyle for a couple is $640,000 or $545,000 for a single person, assuming a partial age pension.
The results profile Baby Boomers as the least financially confident generation, while women continue to have less than men in retirement savings and are not as confident when it comes to their overall finances.
It revealed that Gen Ys are increasingly likely to make contributions into their super and more likely to have a long-term financial plan in place.
Thirty-two per cent of Gen Ys made voluntary super contributions in 2015 – up from 29 per cent in 2014, while 45 per cent of Gen Ys said they had a financial plan in 2014, which was the only generation to increase in 2015, to 48 per cent.
“Every hardworking Aussie wants to be able to retire with enough of a nest egg to live well while they’re able to enjoy it,” Mr Wealands said.
“Our research shows that for many, making smarter choices – which will help build their savings buffer –needs to be a top priority.”
[Related: CBA defends 'slow' scandal response]