A leading financial services firm has revealed Australia’s ‘emerging affluent’ control an estimated $2.2 trillion in household wealth, which comprises property, investments and superannuation. With an average age of 37 years, nearly two thirds (72.5%) are Gen Y and they are primarily executives, professionals and senior managers.
In this article we explore what makes Australia’s emerging affluent tick.
According to *Netwealth’s report, Australia’s emerging affluent are highly qualified, hold executive management roles and have the highest level of household income in the country.
One in 10 indicated they prefer to manage their own finances, and while they have very high competency for understanding financial principles, they are less confident with making financial decisions.
As a Gen Y business owner and financial services professional advising executives in health, finance, technology, construction, pharmaceutical and for ASX listed companies, I can personally and professionally relate to these findings.
I know through my own interactions with high performing executives and being in the middle stage of life myself, circumstances often feel like that are in a constant state of change.
Getting married, raising children, career advancement and on the flip-side job loss and redundancy, divorce and re-partnering, second families not to mention ageing parents who pass away leaving inheritances and estates that must be settled, all make up the fabric of our middle years.
Remuneration packages that include very high salaries, employee share schemes, performance incentives and bonuses can have significant tax implications, while overseas secondments and services specific to expats adds to financial complexity.
This level of financial complexity requires the services of a highly qualified adviser to manage and guide decision making.
It is comforting to know 47.5% of respondents indicate a high level of financial resilience which enables a feeling of preparedness and confidence for successfully navigating through unexpected events or threats to our financial security.
At the other end of the scale, 31.9% of emerging affluents have very low financial resilience with many respondents indicating they had not planned for unexpected events with some commenting “they didn’t really think about the future.”
It’s not surprising 34.5% of those surveyed worry about their finances on a weekly basis. It’s always been my opinion, that financially resilient people worry less than those who aren’t.
Let me explain, generally speaking those who are financially resilient have high incomes and good savings behaviour. They set goals, focus on high-quality, longer-term investments and implement personal risk insurance, a Will and estate plan. They also appreciate qualified advice.
Like me, the emerging affluent also have strong values with the Netwealth report indicating 42% favour ESG (environmental, social and governance) factors.
Interestingly, supporting reports from Netwealth show, Gen Y and Gen X women have significantly higher ESG values with 66% favouring socially responsible investing.
The findings also made clear, emerging affluents need specialised tax management, legal advice and help with novel investments.
I wholeheartedly agree but suggest there are many other matters that also have the potential to affect an individual’s financial life.
These matters commonly include specialised advice in areas of tax, legal structures, business and property, lending, debt management, investing (including ESG investment approaches), super and retirement planning, asset protection and personal insurances, expat services, estate planning and intergenerational transfer.
As we’ve established, Australia’s emerging affluent know what they want and it’s clearly not a cookie cutter approach.
They like to talk things through and seek professionals who advise AND educate, so they may feel confident making financial decisions.
For this group, particularly those who are time poor, the key to managing their significant financial complexity is collaborative advice.
This approach, more commonly known as holistic financial planning, has benefits that include qualified advice across a range of disciplines commonly financial planning, tax and legal that collectively aim to achieving the best overall combined outcomes for the circumstances presented.
To find out more about holistic financial planning based on a collaborative advice team approach, that effectively manages financial complexity affecting high earning executives and business leaders, please give me a call on +61 (0) 7 3007 2080 or email contact@executivestrategies.com.au to request a call back.
To learn more about James Marshall, visit this link.
*www.netwealth.com.au
Executive Strategies is a specialised information hub for executives and senior managers who may have founded their own business or who work for growing private, ASX listed companies or government businesses. Its purpose is to provide access to specialist advisers and information that addresses the often-complex issues affecting their personal prosperity.
Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth ABN 54 139 889 535 AFSL 357306. This advice is general and does not take into account your objectives, financial situation or needs. You should not act on it without first obtaining professional financial advice specific to your circumstances.
Please note: For advice and services relating to this matter that are not offered under the Fortnum Private Wealth AFSL, in accordance with our collaborative advice model, when required, such matters are referred to appropriately qualified professionals.
