Financial advisers key to better financial literacy

A Newspoll survey commissioned by the Investment and Financial Services Association (IFSA) has found Australians in general still need to improve their levels of financial literacy, but those who engaged the services of a financial planner were already ahead of the game.

The study covered a range of topics surrounding investing money, including superannuation, levels of debt compared to savings, and where to get the best financial advice.

In regards to superannuation, an alarming lack of knowledge over the compulsory superannuation guarantee levy was revealed.

Only 53 per cent of respondents knew how much their employer legally had to contribute to their superannuation savings (9 per cent).

Seventeen per cent of participants thought the levy was 5 per cent, while 11 per cent of people asked thought employers had to contribute 15 per cent of their pay to super. Another 11 per cent had no idea of how large a contribution was required.

IFSA chief executive Richard Gilbert described this result as a “shocking finding”.

“Even among those working full time, more than one in three did not know the correct amount,” he said.

Furthermore, when asked what the most influencing factor on the amount of retirement savings was 15 per cent of respondents cited the amount of money they put in their super, 7 per cent said fees were main driver, and 6 per cent said the performance of the share market was the most critical factor.

However, 65 per cent of people correctly stated that all of the aforementioned items put together made the difference and of this group 74 per cent were using a financial adviser.

In reference to the level of people’s savings compared to debt, 37 per cent had more debt than savings, a separate 37 per cent had more savings than debt and, for 22 per cent of respondents, the two elements were in balance.

Once again financial planners seem to be playing an important role in people’s management of debt with 50 per cent of those respondents with more savings than debt employing the services of an adviser.

As far as seeking financial advice was concerned, 67 per cent of those asked thought the best source was a qualified financial planner.

Thirteen per cent preferred to use a family member and a further 11 per cent of people thought banks provided the best channel of advice.

However, 60 per cent of respondents who weren’t currently seeing a financial planner still acknowledged a qualified financial planner was the best person to help them with their financial issues.

The results of the study coincide with the launch of the Financial Literacy Foundation’s ‘Understanding Money’ Campaign.