Too embarrassed to seek advice

New research has found many older Australians are as embarrassed about talking to financial advisers as they are about visiting their doctors.

National Seniors Productive Ageing Centre’s report, The Role of Financial Literacy and Financial Adviser Anxiety in Older Australians’ Advice Seeking, investigated the role of seniors’ financial literacy and anxiety in their decisions about money.

The report’s authors, Paul Gerrans from the University of Western Australia, and Douglas Hershey of Oklahoma State University in America, found the embarrassment about revealing personal details to financial advisers was similar to the reluctance many people experience while disclosing their health problems to medical professionals.

An online survey conducted for the study showed 46% of respondents reported “mild anxiety” about talking to a financial adviser, while in a quarter of cases, anxiety was rated “moderate” to “severe”.

Many were reluctant to reveal personal financial information on subjects such as poor previous investments, their credit card balance, changed employment circumstances and tax liabilities.

They also worried that their advisers would judge them negatively for their past decisions and were also put off by financial market jargon.

“Knowledge is power and older people need to feel confident in discussing their financial futures,” National Seniors chief executive, Michael O’Neill, said.

“Finance professionals should also take steps to gain the trust of their clients by explaining their options in layman’s language and addressing their concerns from the very first meeting,” he said.

Nearly half the survey respondents (47%) said they could only cover their expenses for less than six months without borrowing money or moving house if they suddenly lost their main source of income, a figure of particular concern when older job seekers aged over 55 years are out of work for an average of 72 weeks.

The report stated the disclosure reluctance had the effect of undermining the adviser’s ability to provide appropriate financial advice on matters such as changing super investment allocations and making salary sacrifice decisions.

While financial products had become more sophisticated and complex over the past 20 years, investors’ knowledge of superannuation and retirement saving had not kept pace, particularly with older women over 69 years.

The report recommended governments, private sector employers and super funds conduct public education campaigns to ensure people were financially well informed