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Low levels of financial literacy globally
Financial literacy is low across all income and education levels globally, according to research by Principal Global Investors.
Principal's financial literacy report said asset managers needed to work more closely with educators and financial advisers to close the gap.
Principal chief executive, Grant Forster, said too few Aussies were focused on the outcomes they needed in retirement, and in particular how much income they would need to live on.
"Around the world today's millennials will spend as many years in retirement as they do in lifetime employment, which means they run a high risk of running out of money," Forster said.
"This is particularly true for less developed pension systems, whereas in Australia millennials have the advantage of being among the first to enter the superannuation system as soon as they commence work.
If they do take ownership of their retirement savings in the same way they take responsibility for their careers, and make better asset allocation choices, their financial futures in our mandated system will look a lot brighter."
Forster noted that producing better retirement outcomes for Australians was a societal issue, not an individual one, and required concerted action.
"Investment managers have an important role to play in communicating the investment basics to their clients — understanding what investing is all about, why things can go wrong and how to minimise downside can really help investors make more rational decisions in their financial planning," he said.
"It stands to reason that without financial literacy, investors can't be expected to make the best choices. And the implications of inaction are too serious to ignore."
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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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