One-third of Gen Y plan to retire early at 31 to 40 years while on average Gen X expect to retire around 60.9 years, according to a new ING Direct report.
The report found Gen Ys were more confident than their previous generation about retirement and expected that their lifestyle would be better than now.
The report found less than five per cent of Gen X and Ys had a dedicated financial planner. While 44.2 per cent of Gen Ys were interested in receiving advice, only 19.3 per cent of Gen X felt the same.
ING Direct national partnerships manager for wealth and residential, Tim Hewson, said there was a disconnect between what Gen Ys thought they needed to get to retirement, and what their lifestyles would look like when they got there.
“This is where an adviser can be quite important with ‘how am I actually going to get there?’. There probably is a need for a reality check with being able to retire early versus what will occur at a later stage,” Hewson said.
“Gen Y’s also particularly think they’ll have a better lifestyle in retirement than now. So there lies another opportunity for advisers to start setting those goals and looking at their lifestyle now, to help them able to get there.”
ING’s head of third party distribution, Mark Woolnough, said this disconnect raised an issue on education and that learning bout finance in high school could help with the country’s financial future.
“The other opportunity for advisers is their recruitment and the way they structure their staffing in the future is critical to align the people with the customer base, and especially the future customer base,” he said.
“They’ll have to invest bringing on board employees of the younger generation that think, act, have the same ideas, beliefs is what the research is telling us to make that connection.”
The report also found that Gen X believe that fees for comprehensive, personal face-to-face advice should range from free to $250. However, Gen Y were willing to pay between $100 to $250.
With superannuation funds, the most attractive features for both generations were no fees, low feels, competitive investment performance, trusted brand, and simplicity.
Hewson said advisers should then recommend products and services that include low and no-fee options, simple products, and to educate clients about fees and the performance of fee-based products.
The report said the demand for robo-advice was not strong for either generation.
