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With financial literacy levels among young Australians waning, brokers have revealed how they look to make a difference.
Brokers are in a key position of being able to help educate those making important financial decisions, with most looking to remove the confusion around finances and ensure their clients understand their situations.
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The importance of brokers helping upskill the financial literacy of their clients follows research from NAB revealing that younger Australians are reporting lower financial literacy levels alongside a greater risk of financial hardship, particularly compared to their older peers.
NAB’s financial hardship survey revealed men aged 50–64 (82 per cent) and women over 65 years old (81 per cent) had the highest self-reported financial literacy, with women aged 18–29 (31 per cent) the poorest.
Founder and chief solutions officer at Cinch Loans, Suvidh Arora, revealed that he was finding that the “overall level of financial literacy is lower than ideal”, stating that brokers play a “very important role” in helping alleviate the problem.
Mr Arora said as looking to be part of the solution, his business looked to “remove the jargon” and educate their clients on the basics of finance.
He noted: “We take a very detailed route to educating and nurturing them right from when they first get in touch with us to settlement and beyond, often discussing not only products and features but also strategies around optimisation of portfolio, wealth, etc.”
To try and engage with the younger generation, Mr Arora remarked that Cinch Loans looks to use videos, technology and social media, providing content that they can relate to, as well as looking to “start them early” by running a Cinch savers campaign where the business encourages young kids to start saving early.
He added that Cinch already conducted several education sessions and webinars for clients and was looking to establish the Cinch Academy, which he said would be the business’s “online learning management system which will help increase the levels of financial literacy by making all this content freely available to anyone who uses the Cinch client app, which is to be launched soon”.
Speaking on The Adviser Elite Broker podcast, broker and multi-franchise operator at Aussie, Danny Blair, said he and his teams looked to speak to kids in schools to try and increase the level of financial literacy that he has found to be lacking.
Mr Blair stated: “I think one of the biggest things I’ve found even starting early on as a broker is just a general lack of financial knowledge among everyone generally.
“We get taught the basics for maths, English, science, and everything else in school, but actually, managing your finances, a lot of people don’t know how to manage their finances efficiently.”
Mr Blair provided an example of where his Mount Ommaney franchise team went into the local high school and ran a presentation to year 11 and 12 students about different credit facilities and “the actual interest rates and their implications”.
Ben Robinson, senior finance broker at Inovayt Finance, confirmed that he also saw a lack of financial literacy, particularly among first home buyers and young investors.
Mr Robinson stated he looks to always schedule a “strategy session” to ensure clients are aware of their current position, along with discussing their current and future objectives to ensure their “strategy is robust over the mid to longer term”.
He commented that it was important for brokers to educate their clients as it will help them have a broader understanding of “what we are doing and why, [so] clients start to feel more in control of their financial position”.
Mr Robinson added that “a financial literacy subject in high schools should be mandatory”.
“From age 12 [to] 18, there should be a subject that covers investing, budgeting, living within your means, investment in property, what a credit report is and how it’s influenced/affected,” he declared.
“I see too many young Australians with poor credit history due to small trivial issues that could be avoided through understanding the basic metrics of credit reporting.”
[Related: Cracking the debt burden]
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