MONEYSMART: Bond University Associate Professor of Statistics and fraud expert Adrian Gepp says there's no one-size-fits-all when it comes to finances, but we need to learn and discuss more.
MONEYSMART: Bond University Associate Professor of Statistics and fraud expert Adrian Gepp says there's no one-size-fits-all when it comes to finances, but we need to learn and discuss more.

Not talking money is putting us in danger

OUR lack of financial knowledge is making Seniors more vulnerable to scams and asset loss, and more likely to outlive our savings.

Like politics and religion, finances is a topic we traditionally aren't meant to speak about for fear of offending someone.

But with his recent study showing financial illiteracy in over-55s at "dangerous levels", that's a culture we need to change, according to Bond University Associate Professor of Statistics and fraud expert Adrian Gepp.

The study involved more than 3400 National Seniors Australia members, across a broad spectrum of socio-economics, ages and sexes.

Only 7% of respondents correctly answered all three simple investment questions (included here) as part of the study, and one-third got all three questions wrong.

Older women were most at risk of making bad financial decisions, while people who were unmarried, suffered poor health and the most elderly all recorded poor results.

Education level, occupation and home ownership also played a part.

Worryingly, over 70% of respondents said they never talked about finances with family and friends.

"We need to get away from that stigma of talking about money and open up discussion so we can learn from other people's knowledge and experiences, positive and negative," Adrian said.

It was also important in any relationship that the people involved knew how to access the necessary financial information in case of emergency.

While 50% of study respondents reported joint control of finances, Adrian said often tasks were unquestioningly divided up between partners, so one looked after everyday expenditure while the other oversaw big-ticket items such as savings accounts, mortgage, loans, insurance and superannuation.

"If something happens, you need to at least know where to go and how to access the information you need in relation to those papers and information," he said.

Discussing finances with older family members to ascertain their financial knowledge and where they stand was also important, he said.

But how do you do open that conversation?

"Very carefully," he laughed, adding that it was important to recognise the other person's knowledge and not imply that you have all the answers.

Recognise they might be embarrassed if they are struggling financially and not want to be a burden or lose their independence.

You might even start by talking about a financial issue you are interested to get their advice and gauge their understanding.

His number one tip is talking to a financial planner.

Unlike the general "one-size-fits-all" advice you may get from the TV, newspapers or internet, a good financial adviser looks at each person's individual circumstances on a case by case basis.

The amount of money you will need in retirement, for instance, depends greatly on your health, lifestyle, debts, any financial legacy you want to provide, and your appetite for or adversity to risk.

But after all the revelations of the Banking, Insurance and Financial Services Royal Commission - not to mention exposes on current affairs shows - who do you trust?

A good place to start is the Australian Securities and Investment Commission's (ASIC) MoneySmart website, Adrian said.

This provides independent information on how to choose a financial planner and allows you to check details including that they are qualified and licenced, where they have worked and whether they have been the subject of any ASIC disciplinary action.

It also provides general budget and retirement planners, interest, loan and superannuation calculators, tips on building your wealth, managing your money, debt help and scams.

"If a financial planner is not licensed, walk away," Adrian said.

The next step is to "interview the advisor, check that they are talking in terms you understand, that you feel comfortable asking them questions, get full answers, that they take a wholistic approach to your needs, are not simply promoting one product and that you are empowered to know what's going on".

But we also need to improve our knowledge in order to make informed decisions, and Adrian's advice is to seek several sources.

Again, the MoneySmart website and links provide a good reputable start, but he urged people to also read books or magazines on the topic to verify what you have read is correct, and talk to other trusted people.

He hopes that creation of gamified learning tools, similar to brain-training games, could provide an easy and interesting avenue for people to learn more about finances in the future.

For now, go to moneysmart.gov.au.


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