Young people are relying on financial advice from friends and family rather than seeking the services of a properly qualified independent financial adviser.
Young people are relying on financial advice from friends and family rather than seeking the services of a properly qualified independent financial adviser.
In a survey conducted by RMIT University for the Financial Planning Association, it was found that only 17% of survey respondents aged between 25 and 34 had consulted a financial adviser.
Shaun Williams, general manager group product distribution for Norwich Union, said these figures were concerning, as young people needed to begin their financial plan early in life to make the most of their time in the workforce.
"Relying on family and friends for financial advice can present an unrealistic view. Many parents of young adults today likely faced a very different financial climate when they were young. It’s important to talk to someone qualified who understands today’s economic climate and investment opportunities – it’s essential to have a financial plan from the beginning of your working life to maximise your financial opportunities from the outset," said Shaun.
"Young people today have a lot of financial pressures, ranging from buying homes at record high prices to how to protect their income in case of injury or illness. Everywhere they turn they are being warned about their financial future and the need to be prepared."
For many people in their 20s and early 30s buying a house is their first priority, and at today’s prices this may seem unattainable for some. In Melbourne, the median house price has now reached $331,000 while Sydney is at $415,000.
"These prices mean that some decide to stay out of the housing market altogether – perhaps opting for share ownership or some other form of investment - or take out huge mortgages. However, by getting the right financial advice and planning early, the home ownership dream could be closer than first imagined," said Shaun.
It doesn’t matter how much you earn, it's how much you spend that impacts most on your ability to grow wealth. Balancing debt and savings is a challenge for many people. Right now the average home loan is 2.8 times the average annual household income while the average credit card holder owes more than $2,200.
"For many people repaying their debts is all they can manage – believing other investment strategies to be beyond their reach. However, this may not be the case. By consulting an Independent Financial Adviser earlier in life young people may find that seeking advice early on how best to structure their finances will help them get the most out of their income. Most importantly a financial adviser can help them see some light at the end of the credit card tunnel."
Another trap for young people is failing to plan for the worst. Managing debt can become all the more onerous if people are injured or become ill, yet income protection products often seem expensive and unnecessary to young people. Alternatively, they simply may not even know they exist.
"Income protection products not only protect your income but they also help you meet your payments on those things that you have purchased on ‘credit’ – be that a house, a car or last year’s holiday. No one wants to risk losing their house because they couldn’t afford to pay their mortgage if they are ill or injured," said Shaun.
It’s all about getting financially prepared early in life and understanding the steps you need to take to grow your wealth.
Shaun Williams is available for interview.
For further information, please contact:
Simon Morgan
Group general manager public affairs
(03) 9829 8892
0407 966 632
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Norwich Union Australia is a group of two specialist financial services companies; Navigator and Norwich Union Life. Portfolio Partners, the Australian funds management arm of Aviva plc, is a sister company to Norwich Union. Through these companies we provide products and services in the areas of wealth creation, wealth management and wealth protection for more than 300,000 customers throughout Australia.
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