The Financial Planning Association has carried out the biggest survey yet of how Australians took care of their money during the pandemic – and found millennial investors increasingly turning to digital platforms for help.
An astonishing 61 per cent said they had enough savings to cover the pandemic lockdowns, though over 44 per cent said they had been “more frugal about lifestyle choices”.
And 57 per cent said nothing much had changed or they were actually stronger financially as a result of the pandemic.
But the Association’s CEO Dante De Gori conceded that his members would need to take to platforms like Tik Tok in order to reach millennial investors, and that the FPA was keen to encourage female advisers into the profession as women were generally more stressed and less upbeat about the financial consequences of COVID 19.
The comments come off the back of the release of the association’s Money and Life Tracker: Freedom edition 2021 survey, which coincides with Financial Planning Week, which runs from the 4th to the 9th of October. This year’s theme is “live your today, plan your tomorrow”.
More Australians are now out to make money, whether it’s from shares, property, side hustles or business – the survey shows almost 20 per cent are now keen to invest outside of super.
But millennials were also particularly prominent when it comes to ranking savings as a key goal for the next 12 months.
In response to ranking their financial goals over the next 12 months:
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- Hit a savings goal (66%) – 49% are 30-34 yo and 43% are 35-39 yo
- Go on a holiday (56%) – 47% are 30-34 yo and 49% are 35-39 yo
- Pay off my mortgage/ make significant headway to paying it off (41%) – 40% are 30-34 yo and 42% are 35-39 yo
- Reduce my credit card debt (33%) – 34% are 30-34 yo and 33% are 35-39 yo
- Buy a new property (23%) – 33% are 30-34 yo and 31% are 35-39 yo
- Renovate current property (23%) – 14% are 30-34 yo and 16% are 35-39 yo
- Start investing in the stock market (20%) – 28% are 30-34 yo and 22% are 35-39 yo
- Start working with a financial planner (10%) – 9% are 30-34 yo and 9% are 35-39 yo
The FPA is encouraging people to take control of their finances by creating a financial plan so that they have the condense to make it through today and be prepared for the future, no matter what happens.
At present, there is a disconnect between the financial services industry and their intended customer, with the industry only recently embracing the use of technology to reach their consumers.
Mr De Gori says: “Absolutely we’ll have a Tik Tok account at some point. Some members already use the platform. It’s about using what the consumer uses.”
He says that it’s important that members use the technology that their target market uses and completely supports the use of the platform.
“I think there’ll be a generational thing where you see qualified professionals accessing Tik Tok or similar to reach a broader group of Australians”.
He acknowledges that millennials are seeking financial advice online. However, he adds that using technology shouldn’t be a band-aid to save money on going to a financial advisor.
“We want to provide advice to those who can’t afford to get advice and we want to encourage our members to better serve our clientele.
“That will unlock the ability for more Australians to get financial advice. Technology can go so far but you shouldn’t use that as a band-aid to save money,” he says.
“If you just want to invest in something that will give you the best return that is where technology can come in but if you want to make money because you want to change your career and try something new that’s where technology can’t help you.
“If you’re transitioning from a bank teller job to starting your own business, you need a financial plan and the financial plan can help you transition.”
According to the Money and Life Tracker: Freedom edition 2021 survey, 13 percent of millennials aged 30-34 are already using technology to access financial advice. This contrasts with just one percent of the 60-65 age group.
The research also showed that nine percent of men were willing to embrace technology for financial advice, which compares with just four percent of women.
The FPA does however have groups on Facebook and LinkedIn specifically targeting women.
“We’ve got members who are doing Facebook and LinkedIn groups just for women to engage with their finances and they’re free.
“Women have created a group to reach out to more women to either transition to work or help them with basics.”
De Gori acknowledges that women have different financial needs from men.
“Women are more likely to be carers and are more likely to be the victim of a domestic dispute or some part of financial control or not have the same finances in a break up.
“The FPA is trying to tackle that and superannuation and employment are a great place to start.”
Currently, only 27 percent of FPA members are women, however, they’ve recently received a government grant of $1.5 million to support women in finance.
“Over the next two years we will be targeting women to enter the financial planning industry and we will fund their training, career development, and their internship.”
De Gori says he would like equal representation.
“That’s a goal of ours and by default by increasing the number of women in the industry more women will seek financial advice.
“From stuff we’ve done before, women are looking for people that can understand them.”
The FPA’s research says that women are more likely to set a budget than men (43 percent compared with 34 percent of men).
De Gori says that men don’t set budgets because it’s in their head.
He says; “When it comes to finances, men are more confident and are more likely to take on risks. More men work in the financial services sector and understand the market.”
He cites confidence as being the reason why more men than women invest outside of superannuation (25 percent compared with 12 percent).
“Also I think you’d have to put it down to men have more money and feel they can take on more risks. That’s probably a part of it,” he adds.