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Investment approach and expectation dislink
Aussies seem to have a conservative approach when it comes to super investment strategy but they are in investing in aggressive strategies, according to a survey.
The "Australian Retirement Vision Survey" by State Street Global Advisors (SSGA), and Rice Warner found 68.8 per cent of Australians prefer to take a conservative approach to their super investment strategy, with a focus on dividends rather than long-term growth.
SSGA chief investment officer for investment solutions, Dan Farley, said the respondents showed a disconnect between investor expectation and how they self-selected their investments.
"It does point out the need for advisers to think about how to educate the investor on what they need to do for their portfolio. The risk they say they are conservative yet they invest in things that are more aggressive," Farley told Super Review.
"When we look at the desired outcomes from an income perspective when you look at that relative to a more conservative investment mix, we think they're going to be more challenged to meet those goals."
The report found 60 per cent of the respondents expected their current standard of living to remain the same after they retire. However, 40 per cent were not confident that they will meet their target level of wealth for retirement or that their super will be sufficient to fund their retirement.
When the data was broken down further, the Generation Y respondents were the most optimistic with nearly one-third believing their standard of living in retirement would be better than now.
SSGA's head of portfolio strategists for Asia Pacific, Jonathan Shead, said "if you then look at what people associate their expectations for income are those numbers are pretty high compared to their modest and comfortable income levels."
"People are thinking income levels are quite high and their standards of living are quite high. There's a bit of dislink with reality," Shead said.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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