Let’s empower young Australians to engage with their own money

Getting anyone under 35 to care about their superannuation is not easy. But the risks of ignoring it outweigh the inconvenience.

There’s no time to lose in making money grow.

Let’s be honest, superannuation isn’t exactly a trending topic for young people. Buying a car, saving for their first home or investing in crypto are far more exciting to the average Millennial.

It should come as no surprise then that Australians under 35 are the least confident and the most confused when it comes to superannuation. Our own research confirms this.

It also shows that three in five Australians under 35 have their super set on autopilot – it’s “set and forget”.

For many younger Australians, it’s the default nature of superannuation, one of its greatest strengths, that is also a key driver of disengagement. The system has been designed to allow individuals to automatically default into a fund, without having to consider the alternatives or being forced to nominate their own fund. Too few take the time to choose their own fund and once they have started in their first job, that fund now follows them throughout their working life.

While “stapling” has been a positive change to avoid unintended multiple accounts, it also further entrenches disengagement and apathy.

We need to do more to engage younger Australians, help them seize the opportunity to engage and understand more about the choices they have, especially when you consider the fact that half of Australians under 40 say their super doesn’t even feel like their own money.

Changing these attitudes will be difficult, but it is essential. A first step is providing more engaging material for super fund members to help them learn about the topics that matter.

Enabling access to different forms of advice and smart digital tools will also be key, as will finding more ways to remind them that it is their money.

Colonial First State Superannuation CEO Kelly Power.

This has been the case for my daughter, who recently opened an Essential Super account via the Commonwealth Bank app. She can now see her super balance each time she logs in to the app, alongside her savings account. Just seeing the two accounts side-by-side in the one place has prompted her to begin asking questions about her super and expanding her own financial education.

Those who take an interest and broaden their knowledge are in a far better position than those who don’t. Our research shows that people with higher financial literacy are twice as likely to feel positive about their financial future.

We need to cater to the young Australians who are thirsty for knowledge and responsive to innovative approaches.

They are also eager to get financial advice. Our Empowered Australian report found that 61 per cent of Australians are open to paying for financial advice with their super. The strongest interest was from Australians aged 25 to 29. Three in four men and a similar number of women in their late twenties wanted advice and were willing to pay for it using their super.

To help meet this need, we have introduced a new personalised digital advice offering for CFS members who do not have a financial adviser. For $88 a year, with the cost able to be deducted from their super account, members can receive digital advice on their investment options, contributions strategy and insurance arrangements. They will also be able to test different scenarios and determine which approach makes the most sense for them and their goals.

We believe there is a significant generational opportunity for new digital advice models and tools to demonstrate the value of financial advice to a larger number of Australians, particularly younger ones. Helping more people access advice earlier will have the added benefit that they will be more likely to access professional advice later in life as their needs become more complex over time. We know from our research that those who get advice are far more positive about their financial future and are twice as likely to retire at a time of their choice. These are the benefits more Australians must have access to.

Much-needed advice reforms are now under way, with more to come. If Australians are to receive the help they want and need, the government’s reforms must remove the barriers holding superannuation funds and professional advisers back from providing more affordable advice and support to their members and clients.

Kelly Power is the chief executive of CFS Superannuation