Tailoring financial advice for each generation
Financial planners must take into account generational differences when preparing advice for self-managed superannuation fund (SMSF) investors, according to a new report.
The SMSF Generations report, prepared by Macquarie Bank and the Self-Managed Super Fund Professionals' Association, examined the preferences of four generations of SMSF investors.
Although Generation Y (those currently aged 18-33) are generally highly confident, they are cautious when it comes to financial decisions, according to Macquarie banking and financial services group analytics research manager Gary Lembit.
"They're much more open to advice, and keener to try things. They have much more time to make corrections if things don't go the way they plan," he said.
Only 20 per cent of 18-33 year-olds have a financial adviser, according to the report.
Generation Y tends to receive a lot of information from family and friends - and they even use social media to discuss financial issues, Lembit said.
"In fact they'll talk to anybody just to get that degree of confidence they need to make those decisions," he added.
Members of Generation X (those aged 34-47) are extremely time poor, because they are dealing with the competing pressures of getting married, having children and buying a house, Lembit said.
"To a large extent, they leave their adviser with many of the decisions because they haven't got time to do the study that younger people have," he said.
SMSF investors in Generation X want their advisers to provide them with detailed agendas and quick, "punchy" advice, Lembit said.
"The concept of being able to ask your [Gen X] clients to walk in nine-to-five is probably a thing of the past.
"Advisers need to spend their nine-to-five time doing more of the admin stuff and making themselves available to their clients outside hours," he said.
Baby boomers (48-65) are increasingly seeking advice - 44 per cent of SMSF investors in this generation have an adviser.
However, the Silent Generation (66 plus) are the most likely to seek advice - with 55 per cent employing an adviser. Surprisingly, this cohort has increased their allocation to direct equities in the past six years, according to the report.
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