Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
Australia surges up retirement security ranks
Australia moved up two spots on the latest Natixis Global Retirement Index to 5th after maintaining scores across a series of top-line categories while other developed nations The Netherlands and Germany fell behind.
And while 2022 might have been one of the worst years on record to retire, with lower rates and pitted markets gouging portfolios, Australia has maintained its place as one of the best countries in the world to retire.
The index, now in its tenth year, examines the factors that drive retirement security including material well-being, finances in retirement, health and quality of life.
Ranked 7th in 2021 behind Iceland (1), Switzerland (2), Norway (3), Ireland (4), The Netherlands (5) and New Zealand (6), Australia moved ahead in 2022 despite scoring lower in two out of four major categories.
While Australia’s health score improved from 87 per cent to 88 per cent, and quality of life stayed put at 77 per cent, material well-being dropped one percentage point to 66 per cent and finances in retirement fell from 74 per cent to 72 per cent.
The state of our retirement system is somewhat improved on a decade ago, as scores on health (6 per cent) and quality of life (2 per cent) have strengthened. Cost of living increases, however, have led to a glaring disparity in domestic material well-being, where scores have dipped from 85 per cent a decade ago to 66 per cent today.
More broadly, the Natixis index notes that the world is again recovering from a global crisis in the Covid-19 pandemic – just as it was when it first started the index in 2012 in the shadows of the GFC.
“Inflation is running at levels not seen since the 1980s,” the index states. “Balance sheets and debt levels have soared even higher. Central bankers again are turning to interest rates as a stopgap, only this time they’re raising rates. After a decade-long bull run, the markets are more volatile, with indexes and investors around the world experiencing losses. The Boomer retirement wave is at its crest, and the Millennial generation is making its presence known in the workforce.”
Moreover, the choppy conditions are set to elevate due to volatile markets, the after-effects of the pandemic and the war in Ukraine.
“Inflation, the long-sleeping giant among financial woes for retirees, has been riled up in the jet wash of a global pandemic and war in Ukraine,” it states. “Skyrocketing prices for oil, food and shelter are taking a dramatic bite out of the purchasing power of retirees and presenting a core economic lesson to those still planning for life after work.”
