Financial security is a vital aspect of an individual’s overall wellbeing, with positive impacts on mental health, according to new research.
Fidelity International’s latest report in conjunction with CoreData, The Value of Advice, reveals more than half of respondents consider financial problems to adversely impact their mental health.
In addition, 48 per cent of respondents say financial issues have adversely affected their relationships with family and friends.
The report reveals two in five have had physical adverse reactions to financial issues and a staggering one in four Australians worry about their money daily.
Alva Devoy, managing director of Fidelity International in Australia says: “It is clear that every facet of individuals are affected but we just don’t think holistically in remedying it.”
“It is concerning that more Australians aren’t aware of the benefits that financial advice can bring, not just to their finances but to their overall quality of life.”
Interestingly, almost half of those who receive financial advice say that aside from their personal finances, their mental health has benefited. This was followed by their family life at 37.8 per cent.
Nearly one-third of respondents who received financial advice did so as they were approaching retirement. This was followed by 23.1 of respondents buying property as a trigger for financial advice.
Despite the specific reasons for seeking advice, the effects of financial advice among this group are wide-reaching.
The most common personal goals as a result of financial advice are living their desired lifestyle (43.1 per cent), not having to worry about money (42.7 per cent), improved mental health (39.5 per cent), being able to travel regularly (36.2 per cent) and being able to spend more time pursuing hobbies (26.2 per cent).
Devoy says: “These goals should be a second-order effect to investment returns. When you think about the human condition, nothing makes you feel better than being in control.”
The biggest barrier to advice that Australians are confronted with is the cost at 37 per cent. Surprisingly only 16.2 per cent of respondents said they had difficulties finding someone they could trust.
According to Devoy, the biggest challenge for financial advisers now is to prove to Australians the value of advice. They have come up with a ‘navigation style’ tool to assist advisers to communicate more effectively.
The research identifies four types of investor groups: celestial navigators, GPS navigators, radio navigators and compass navigators.
CoreData managing director Jason Andriessen says: “The service offers and the articulation of value are very different for each of these four.”
Celestial navigators are typically one third of advice clients. They are older, wealthier and closer to retirement. They want competency and trust to solve their specific requirements.
GPS navigators are almost half of the population. They focus on value for money and transparency in the costs and benefits of advice. They want to maximise returns and minimise fees but do not necessarily want the cheapest service.
Radio navigators are about 10 per cent of society and are typically young, wealthier and male. They want to build a rapport with their adviser and intuitive guidance.
Compass navigators are around 15 per cent of people. They are younger, have restricted budgets and are just starting out in their careers. They are looking to grow and manage wealth and will likely have short-term, transactional relationships with advisers. These are probably the children of celestial navigators.
Andriessen says: “These people are clustered into groups in relation to how they prefer to deal with a financial planner and obviously the utility that a financial planner brings is different for each. We are hoping this becomes a tool that advisors can use to work with their clients.”
CoreData undertook the survey with a pool of 594 retirees and 1,634 non-retirees. This included 502 currently advised individuals, 570 previously advised individuals and 1,156 unadvised individuals.