YOUNG people have way too much to think about these days. When I was in my early 20s, fresh out of university, there was no compulsory superannuation, I'd never heard of a financial planner, and the only way to get money from the bank was to stand in a queue.
But things changed so quickly and now, even youngsters who have only just begun their working lives are expected to know about superannuation funds, top-up limits and co-contributions. They're expected to have financial literacy and be responsible now for the size of their retirement income in 40 years' time.
How did we get here? In the late 1980s, the federal government decided a day would come when it could no longer fund the age pension to a level everyone could live on. So, in 1992, the Superannuation Guarantee changed the responsibility for incomes in retirement: rather than a pension from the government or a "defined" benefit from an employer, the government would instead require employers to put a mandated percentage of an employee's salary into a super fund. It could not be accessed until the worker retired.
With the Superannuation Guarantee, the onus changed from the government and employer to the employee. So the quality of retirement for people in their 20s and 30s will largely be their own responsibility: the amount of retirement income they have to spend will depend on investment decisions made now.
And here's the irony: the best time to be arranging and building your retirement nest egg is precisely in those years when you least want to think about it. Because super is a 40-year investment, small increases to contributions and slight changes in what kind of fund you use at the beginning of the journey can have a big impact at the retirement end.
Also, the very people who can help young people with advice - financial planners - are moving away from their old commission structure to a fee-for-service model. This will make financial planners non-conflicted because it means they will not be tempted to steer clients to financial products simply to gain a commission.
But the fee-for-service model means the client pays for the level of service they receive. And because young people have less money, and are less engaged with retirement planning in general, the planners are as reluctant to chase them as clients as the young people are reluctant to hire them.
This creates what some people call a "service gap". The gap - which could cost some people tens of thousands of dollars in poor decisions - is confounding.
We know from our own research that young people want advice about building a large retirement nest egg, but they do not use planners.
Last year, we did a poll of 500 young people from Sydney, Brisbane and Melbourne, aged 25 to 34 years. When asked how interested they were in planning for their future, 92 per cent answered either very interested or somewhat interested. And when asked if they planned to seek advice to discuss their financial goals, a little more than half answered yes.
This means that a huge majority of young people want to set themselves up for the future but only half are interested in speaking to someone to get the right advice.
This is an important insight because financial planners don't just help select the right super funds to invest in, they also set up the right insurances and associated aspects of a person's present and future wealth. They attend to the whole picture, which is something young people are unlikely to have much experience with. The investment options people nominate when they are not advised is illuminating. When asked what they would be most interested in investing in, 51 per cent of those surveyed said the sharemarket.
Since half would choose to invest in equities, which are currently quite risky and volatile, the question has to be asked: what perception do young people have that keeps them from professional advice and keeps them focused on a volatile investment class? Is the lack of advice directly attributable to a focus on risky investments? And why do young people feel more comfortable with an entire investment class than they do with professional advice?
There are many issues to be resolved if we expect people not just to fund their own retirement but to do so in an optimised way.
Do people think advice is too expensive? Is it too time-consuming? Or do people just feel they are better off making their own decisions?
I'd love to know your opinion. Talk to me on Facebook at facebook.com/ybrwealth or on