Tag: NAB

The Future Is… Uncertain

Australians and businesses overwhelmingly think our country is a great place to live and have a business. However, Australian consumers and businesses are anxious about what the future holds.

National Australia Bank (NAB) today released a new report which asks consumers and businesses to explore life, work and running a business in Australia – now and in the future.

“Nine in 10 Australians told us our country’s open spaces, people and lifestyle and access to affordable and quality healthcare are the biggest contributors to liveability and their choice to call Australia home,” NAB Chief Economist Alan Oster said.

“There are some clear differences between states. Consumers in SA/NT are much more positive in relation to travel time, living costs and housing – and in Victoria, a love of sport means entertainment options feature more prominently for liveability than any other state.”

Businesses too are optimistic, with 8 in 10 (82%) surveyed viewing Australia as a great place to have a business.

“Australian business people see the economy, our close proximity and strong connections to Asia and the growing population as some of Australia’s key strengths,” Mr Oster said.

“Making the most of these strengths is vitally important for Australia, to support more growth opportunities for businesses and the millions of Australians they employ.”

But despite their current optimism, the report found only 1 in 2 people and 60% of businesses think Australia will be a great place to live and have a business in 10 years’ time.

“There is a clear message of anxiety in the future coming from Australian consumers and businesses,” Mr Oster said.

“Australians identified access to social welfare, living costs, tax levels, jobs and housing affordability as the key factors they expect will deteriorate the most in the next 10 years. Consumers are saying they expect very little progress in the areas already holding Australia back now.

“While a person’s income didn’t affect current perceptions of liveability, there was a large future disconnect between high income earners (earning over $100,000) and those earning under $35,000 a year.”

Businesses are slightly more optimistic.

“Australian businesses expect the things that make our country great now to continue to make us great in the future – this includes our population, proximity to Asia and our innovative and entrepreneurial economy.”

“These insights on how Australians feel about our country may be able to help businesses and governments discover what we’re concerned about, and prompt discussion on how to tackle some of the big issues,” Mr Oster said

About 2,300 consumers and 500 businesses took part in the survey, and full findings can be viewed here.

Consumer Spending Patterns Vary Significantly

In a new report NAB explores the spending behaviours of their customers. At the top level, the data shows that whist average growth in spending was 3.1%, ACT let with 4.8% whilst in WA spending went backwards in the 4Q16.

 

 

Customer spending in Australia – based on NAB’s transaction data (including BPAY) – grew 3.1% y/y in Q4 2016,with average monthly spending during the quarter of $2,117 in metropolitan areas and $1,949 in regions.

Spending growth in Regional areas (3.5%) outpaced Greater Metropolitan or “City” areas (2.9%).

By capital city area (based on ABS definitions), spending growth was fastest in Hobart (4.1%), Sydney (3.9%)and Melbourne (3.7%) and slowest in Perth (-0.4%) and Brisbane (1.7%).

In regional areas, it was fastest inNSW (4.7%) and VIC (3.7%) and slowest in NT (-1.4%) and WA (0.7%).

Spending was dominated by the Eastern states – with NSW, VIC and QLD accounting for around 80% of total spending. Sydney, Melbourne and Brisbane accounted for over half (50.1%) of total NAB customer spending.

The fastest growing metro areas in Australia were Hunters Hill NSW (13.2%), Woollahra NSW (9.9%) andMosman Park WA (9.5%). The fastest growing regions were in NSW – Walgett (19.7%), Upper Hunter Shire(16.1%) and Murray (14.4%).

Cities accounted for 64% of all spending and regions 36%. Cities accounted for the biggest share of spendingin all states, particularly Adelaide (78%), Perth (77%), and Melbourne (75%). Spending in Regional areasaccounted for a comparatively bigger share of total state spending in TAS (50%), QLD (55%) and NSW (40%).

By category, spending growth was fastest for Accommodation, Cafes, Pubs & Restaurants (13.5%).

By examining around 4 million daily transactions, they show where spending is growing fastest and in which industry groups. This will help to better inform consumer behaviour and activity. Given the size of NAB’s customer base, they say this data provides a strong indication of national and regional trends.

Business Confidence On The Up

According to the latest NAB Business Survey for January 2017, both business conditions and confidence jumping to much higher levels.

The strength witnessed in last month’s NAB Monthly Business Survey continued into January, with both business conditions and confidence jumping to much higher levels. While these outcomes are certainly pointing to an improvement in the domestic economy after a soft patch through much of H2 2016, a degree of caution should still be exercised given the diverse and rapidly changing seasonal influences at this time of year (which potentially includes the shift in Chinese New Year to January this year).

In terms of the headline numbers, the business conditions index jumped by a solid 6 points in January, to +16 index points, which is around pre-GFC boom levels. This month, another rise in trading conditions contributed to the outcome, but there was also a noticeable jump in employment conditions, which bodes well for the generally underperforming labour market – the employment index hit its highest level since 2011.

Meanwhile, profits were unchanged at solid levels. By industry, last month’s surprise spike in wholesale conditions was unwound (as anticipated), but that seems to have been more than offset at the aggregate level by improvements in personal services, while retail and mining are no longer negative. NSW enjoyed the bulk of the improvement in conditions, while the rest of the mainland states were relatively steady. Cost price measures in the Survey also lifted notably, suggesting a build in wage pressures, although retail price inflation remained very subdued.

Business confidence also jumped in the month, aligning itself with the general enthusiasm seen in financial markets and more positive sentiment towards the global economic outlook. The business confidence index jumped 4 points to +10 index points in January, which was well above the series long-run average. Responses on capital expenditure were also much more encouraging in January, consistent with a rise in capacity utilisation – although forward orders do not point to a continuation of that strength in the near-term.

Recent strength in the NAB Business Survey is consistent with an anticipated rebound in economic activity, following the very weak Q3 2016 National Accounts. With that said, a confluence of seasonal factors suggests it is unwise to get too carried away with the result just yet, especially as key industries like retail remain extremely weak (despite improving in the month), which suggests the outlook for consumption remains cloudy. NAB Economics also have concerns for the longer-term growth picture, as the contribution from LNG exports, temporarily higher commodity prices and the residential construction boom fade, keeping pressure on the labour market.

Nevertheless, in light of the recent flow of data, NAB’s economic forecasts (which include expectations for the RBA’s cash rate) are currently under review – to be published tomorrow.

NAB branches give paper deposit slips ‘the slip’

NAB says paper deposit slips will soon be a relic of the past across all NAB branches.

NAB customers will be spared the tedious effort of having to fill out paper deposit slips for over-the-counter transactions from tomorrow.

Executive General Manager of Retail, Bob Melrose, said paper deposit slips would be removed from NAB’s branches from Saturday 11 February 2017, with withdrawal slips to follow in March.

“We know our customers want banking to be quick and simple, which isn’t always the case when you have to muck around filling out forms,” Mr Melrose said.

“This move means we’ll be collectively saving our customers from completing these details more than six million times each year.

Customers will instead receive a printed receipt which itemises the details of their transaction. Deposit slips will still be available for some transactions such as passbook accounts and bankers will assist anyone who has questions about what this means for them.

“We’re not the first bank to take this step by any means, but we’re committed to making it easier for our customers to do their everyday banking with us.

“We have a dedicated team to identify and fix what frustrates customers the most. We know from feedback that paper deposit slips were a sticking point for many of our customers, and that’s why we are making this change.

“It also brings us in step with the more than 90 per cent of customer transactions which take place digitally,” Mr Melrose said.

Fast facts:

  • Around 12 million deposits are made in NAB branches each year
  • More than 3.2 million – or 27% – of these are currently made with paper deposit slips.
  • Around 8.2 million withdrawals are made in NAB branches each year.

More than 3.7 million – or 47% – of these are made with paper withdrawal slips.

NAB Q1 2017 Trading Update

NAB released their December 2016 trading update today.

It looks like revenue is running a bit below system, expenses are considerably higher, but the quarter was saved by a cut in bad and doubtful debt provisions. Impaired assets rose.

They say that un-audited cash earnings (their preferred measure although not a statutory financial measure, as it is not presented in accordance with accounting standards and excludes discontinued operations and “certain other items”) were about $1.6 billion, which is around 1% lower than the quarterly average of the September 2016 half year and 1% lower than the prior corresponding period.

They say revenue grew around 1%, thanks to higher trading income and growth in lending, whilst group net interest margin was broadly stable. Given mortgage system growth is running circa 6% annually at the moment though, this seems on the low side.

Expenses rose 5%, thanks to EBA, redundancies and project costs, and only partly offset by productivity savings which they say should deliver around $200m. They reduced FTE by 488.

They reduced the charge for bad and doubtful debts by 23% to $164m because the one-off provisions they made in September for mining and agribusiness were not repeated.  However, impaired assets stood at 0.90% in December, up from 0.85% in September. Provision coverage of gross impaired assets rose from 38.3% to 43.0%.

The CET1 ratio was 9.5%, compared with 9.8% in September, reflecting final dividend payouts.  They said they may issues new ASX-listed Subordinated Tier 2 capital security, depending on market conditions.

The group’s leverage ratio was 5.4%  (APRA basis) and LCR was 124%.

NAB commissions independent Assurance Review of its superannuation business

NAB says its superannuation trustee, NULIS, has commissioned an independent Assurance Review into its superannuation business. ASIC also made a release.

This follows an agreement with the corporate regulator, the Australian Securities and Investments Commission (ASIC), that the Review will be the subject of additional conditions on the Trustee’s licence.

NAB has worked cooperatively with ASIC throughout this process, with a combined focus on doing the right thing by our customers.

Acting Executive General Manager, Wealth Products, Garry Mulcahy said: “We support the Assurance Review as it will give our customers further confidence in the systems and processes supporting our superannuation business, following a period of significant transformation.

“Over the past five years, we’ve made substantial changes to upgrade and simplify our superannuation business to better serve our customers’ needs.

“We’ve merged five of our super funds to create Australia’s largest retail super fund, the MLC Super Fund, with $70 billion funds under management, and we’ve also implemented significant regulatory change, including Future of Financial Advice (FoFA) reforms and Stronger Super.

“We have improved our structure that will allow us to continue to innovate. The Review will provide independent assurance that our fund governance is delivering for our customers,” Mr Mulcahy said.

External consultants, KPMG, will conduct the Review with the first report to be provided to ASIC and the Trustee by July 2017.

We have also updated the details of the remediation program for corporate superannuation customers in relation to Plan Service Fees, previously announced on the 27 October 2016. NAB confirms a total of $34.7 million will be paid to approximately 220,000 customer accounts, with the average compensation amount per customer account expected to be approximately $150.

In addition, we have identified ten customers in the MasterKey Business Super and Masterkey Personal Super products that were impacted when we upgraded their life insurance benefits in 2013. While approximately 400,000 customers were provided access to improved life insurance through this 2013 change, 10 customers had claims incorrectly declined and we’ve paid $1.8 million in additional insurance benefits to these customers.

Mr Mulcahy said that our focus has been to do the right thing by our customers.

“Our intention with the proactive restructuring of our corporate super products and the upgrade of insurance products was to do the right thing by our customers, and we did provide equivalent or better outcomes for customers. However, we didn’t execute the change well and we’re sorry to those customers affected,” Mr Mulcahy said.

About the Assurance Review program

The Assurance Review program is an in depth review into the superannuation business. The Review is intended to provide assurance on the continued fairness and efficiency of key aspects of the superannuation business.

The scope of the Assurance Review will include:

  • risk management procedures;
  • process for implementing product changes, disclosure and reporting to members, and

procedures for managing conflicts of interest within NAB’s superannuation business, including the assessment of related party service providers.

Here is what ASIC said:

ASIC has imposed additional licence conditions on the Australian financial services (AFS) licence of NAB’s superannuation trustee, NULIS Nominees (Australia) Limited (NULIS), following breakdowns in internal procedures.

The conditions require NULIS to engage an ASIC-approved independent expert to assess and report on the adequacy of its compliance and risk management practices for its retail and wrap superannuation funds. NULIS has agreed to the conditions, and KPMG has been appointed as the independent expert.

The conditions were imposed on NULIS following ASIC’s enquiries into a breach reports lodged by NAB’s wealth entities. The breaches involved a breakdown in risk management and communication procedures following the transfer in 2012 and 2013 of all members in a number of products to MLC MasterKey Business Super (MKBS) and MLC MasterKey Personal Super (MKPS), as well as changes made to the death and total and permanent disablement (TPD) insurance of MKBS and MKPS members. Approximately 400,000 members were impacted by the insurance changes.

System breakdowns included:

  • inadequate disclosure of insurance changes to members;
  • inadequate training for staff, and
  • insurance policies not being updated.

As a result of the breakdowns, incorrect death and TPD insurance tests were applied to MKBS and MKPS members between May 2013 and July 2015.

NAB’s wealth entities have identified that 10 members’ insurance claims were incorrectly assessed with approximately $1.6 million in members’ claims underpaid or declined. NAB has compensated affected members a total of $1.8 million, including interest.

In addition, NAB’s wealth entities identified that over 220,000 member accounts were incorrectly charged planned service fees (PSFs) of approximately $34.7 million between September 2012 and October 2016 in the MKPS and MKBS products. Fund members were charged PSFs for the provision of general advice in circumstances where no plan adviser had been appointed to provide such advice. ASIC’s report Financial advice: Fees for no service issued in October 2016 (Rep 499) included part of this amount in the estimates of compensation to be paid to consumers for such failures. Since the release of that report, NAB has confirmed that it will compensate these fund members for the incorrect charge and have also confirmed the compensation to be paid. ASIC’s inquiries into the PSF breaches are continuing.

The independent expert’s review will consider, among other things NULIS’:

  • risk management procedures;
  • process for implementing product changes, disclosure and reporting to members, and
  • procedures for managing conflicts of interest within NAB’s superannuation business, including the assessment of related party service providers.

The independent expert will report to ASIC and NULIS and provide recommendations as to any steps that should be taken by NULIS to ensure that its procedures are adequate.  NULIS is also required, under the licence conditions, to inform ASIC of any recommendations that it does not propose to implement and provide reasons.

ASIC Commissioner Peter Kell said, “The additional conditions imposed on NULIS’ AFS licence reflect ASIC’s priority of improving compliance and disclosure standards in the superannuation industry, including vertically integrated financial services licensees.”

ASIC acknowledges the cooperative approach taken by NAB and NULIS in this matter.

Background

On 1 July 2016, NAB restructured its superannuation business by transferring five superannuation funds (including the MKBS and MKPS products) into the MLC Super Fund. NULIS also became the trustee of the transferred funds.

ASIC is focussed on ensuring that AFS licensees maintain appropriate risk and compliance management frameworks. The handling of conflicts of interest within the financial services industry is an area of concern to ASIC and ASIC recently undertook a review of the practices of major industry participants in the funds management area. A summary of our findings appears in ASIC Report REP 474 Culture, conduct and conflicts in vertically integrated businesses in the funds management industry.

Business Conditions Improved In December – NAB

The December NAB Monthly Business Survey indicated a reprieve from the steady moderation in business conditions seen late last year.

That outcome points to a stronger outlook for the economy, but we remain cautious given other aspects of the Survey that suggest the rebound might prove to be temporary. Weakness in retail conditions is particularly concerning, while we are not seeing any real signs in the Survey of a convincing recovery in non-mining investment – crucial to both near-term and longer-term growth prospects (although the drag from the mining sector should soon ease). While some ‘bounce-back’ from the weather affected Q3 GDP can be expected, a return to a more subdued growth track thereafter still seems likely as the positive effects from the housing construction cycle, commodity exports, and (temporarily) higher commodity prices washes out.

Business conditions saw an impressive rebound this month, largely unwinding the steady downward trend seen since mid-2016. The business conditions index (an average of trading conditions (sales), profitability and employment) jumped 5 points, to +11 index points, which is well above the long-run average for the series (+5). Meanwhile, business confidence has been quite steady over the past year, and December was no different. The confidence index was unchanged at +6 index points, consistent with the long run average.

According to Mr Alan Oster, NAB’s Chief Economist, “the rebound in business conditions is certainly encouraging, but at this stage we are not getting too carried away with the result. Stronger business conditions in December largely reflected unexpectedly strong improvements in some industries, which might not be sustained, while other indicators were generally mixed as well. As for business confidence, the stability we have seen for some time now has been welcome, but it does not fully reflect the strength in business conditions. That might suggest that business still has a high degree of concern about global uncertainties in particular”.

By industry, the improvement in business conditions in December was most pronounced in wholesale and transport & utilities, while manufacturing and retail recorded deterioration. “We were a little surprised by the strength in wholesale, particularly given much more subdued conditions in related industries such as manufacturing and retail. Retail is now the weakest industry in the Survey, which is concerning given the importance of household consumption to the outlook”, said My Oster. Looking through monthly volatility, service industries remain the best performers.

Within business conditions, the jump was completely driven by higher trading conditions and profitability, while the employment index was unchanged at relatively subdued levels.

According to Mr Oster, “employment conditions have remained stubbornly muted and suggest the labour market is still not generating enough jobs to bring the unemployment rate down from its elevated level. That said, the employment index does point to slightly stronger employment growth than we have been seeing from the ABS Labour Force Survey of late”.

The near-term outlook improved marginally in this month’s Survey, with the forward orders index jumping above its long-run average level. However, the capacity utilisation rate, which is relevant to future employment and capital expenditure, eased back. According to Mr Oster, “the outcome for forward orders suggests good near-term prospects for activity, but the drop in capacity utilisation warrants monitoring, especially if it points to a continuation of the downward trend seen over the second half of 2016”.

“The headline results from the Survey indicate some upside risk to the outlook, but the mixed results below the surface suggest a degree of caution is warranted. Importantly, we are not seeing any real signs of a convincing recovery in non-mining investment in the Survey, which is crucial to both near-term and longer-term growth prospects” said Mr Oster. While some ‘bounce-back’ from the weather affected Q3 GDP can be expected, a return to a more subdued growth track thereafter still seems likely as the positive effects from the housing construction cycle, commodity exports, and (temporarily) higher commodity prices wash out.

Two more 25bp rate cuts are still expected from the RBA this year in response to ongoing low inflation and a more subdued growth outlook. NAB Economics will be issuing an update on the economic outlook in coming weeks.

Foreign Property Buyers On The Rise

According to the latest NAB Quarterly Australian Residential Property Survey, Q4 2016, foreign buyers increased their market share in both new and established housing markets for the first time since late-2015.

In Q4, foreign buyers accounted for 10.9% of all new property purchases (10.2% in Q3) – the highest level since Q1’16. In established housing markets, their share rose to 7.6% (6.4% in Q3) – the highest level since Q4 2015.

In new property markets, foreign buyers were noticeably more prevalent in VIC, where their market share of sales rose to 19.3% (15.0% in Q3).

In WA, their market share grew to 9.3% (6.6% in Q4). Interestingly, the share of foreign buyers in WA has been climbing steadily since Q2’16, suggesting foreign buyers may be seeing greater value as local prices fall.

Foreign buyer levels were however broadly unchanged in NSW at 8.1% (8.0% in Q3) and fell in QLD to 9.2% (10.5% in Q3) to its lowest level since mid-2014.

In established housing markets, the share of foreign buyers increased to 10.8% in VIC (8.5% in Q3) – its highest level in over a year – and 8.4% in NSW (7.2% in Q3). Foreign buyers were also a little more active in WA (5.4% vs. 5.2% in Q3), but were less prominent in QLD, where their market share fell to just 5.0% (5.7% in Q3) – the lowest since mid-2012.

Around 55% of all property purchases made by foreign buyers in Q4 were for apartments, 30% houses and 15% land for re-development.

But these ratios varied quite a lot by state. In VIC, around 47% of sales were for apartments, compared to around 59% in NSW and QLD and 52% in WA. In contrast, around 33% of foreign purchases in WA and 32% in VIC consisted of houses, compared to 27% in NSW and 31% in QLD. Just over 1 in 5 (21%) properties purchased by foreign buyers in VIC were for dwellings/land for re-development purposes, compared to just 11-15% in all other states.

By price point, around 30% of apartments purchased by foreigners were valued at less than $500,000, and 45% were valued at $500,000-$1 million. Around 16% were for apartments worth $1-2 million, 7% for properties worth $2-1 million and 3% for apartments over $5 million.

Around 41% of apartments sales in QLD and 42% in WA were for properties under $500,000, compared to just 20% in NSW and 30% in VIC. Property sales in the $500,000-$1 million range varied from 47% in NSW t0 40% in VIC.

At the prestige end of the market, around 11% of property sales in NSW and VIC were over $2 million, compared to just 6% in QLD and WA.

NAB Re-balances Mortgage Rates

NAB today has announced changes to its home loan fixed rates.

From today, NAB will decrease its 1 year Package Fixed Rate for Home Loans to a highly competitive rate of 3.89% per annum for owner occupiers. NAB will also decrease its 1 year Package Fixed Rate for Residential Investment Home Loans to 3.99% per annum.

Meanwhile, NAB’s 2, 3 and 4 year Package Fixed Rate for Home Loans will increase effective today, to 3.98%, 4.09%, and 4.59% per annum respectively; and 2, 3, 4 and 5 year Package Fixed Rate for Residential Investment Home Loans will change to 4.19%, 4.29%, 4.79%, and 4.79% per annum respectively.

“There are a range of factors that influence the funding that NAB – and all Australian banks – source, so we can provide home loans to our customers,” NAB Chief Operating Officer, Antony Cahill, said.

“The cost of providing our fixed rate home loans has increased over recent months.”

“We continue to watch market and economic conditions to ensure we continue to lend and manage our business responsibly, so we remain strong and stable for the benefit of our customers, shareholders, and the broader economy,” Mr Cahill said.

Today’s decision applies to new fixed rate home loans only. NAB continues to closely monitor the various factors that influence its Variable Rate for Home Loans (Standard Variable Rate) for owner occupier customers, which remains at 5.25% per annum at this time.

Mr Cahill said NAB’s fixed rate home loans remain highly competitive – especially with today’s new one year rates.

“We know that fixed rate home loans have become increasingly popular with our customers. We saw these applications more than double as a share of total applications in December, compared to in September last year,” Mr Cahill said.

Customers who want to have certainty about their monthly repayments should speak with their banker or broker to find out more about what’s available, and if a fixed rate home loan might be right for their circumstances. Conditions, fees and eligibility criteria apply to NAB’s products.

NAB will also change NAB Homeplus Fixed Indicator Rates, available through NAB Broker, as stated above.

 

Advertised Fixed Rates for NAB Tailored Home Loan (Choice Package)

Principal and Interest Interest Only
New Rate Old Rate New Rate Old Rate
1 year 3.89% p.a. 3.99% p.a. 3.89% p.a. 4.09% p.a.
2 years 3.98% p.a. 3.75% p.a. 3.98% p.a. 3.85% p.a.
3 years 4.09% p.a. 3.89% p.a. 4.09% p.a. 3.89% p.a.
4 years 4.59% p.a. 3.99% p.a. 4.59% p.a. 3.99% p.a.
5 years 4.59% p.a. 4.59% p.a. 4.59% p.a. 4.69% p.a.

 

Advertised Fixed Rates for NAB Tailored Home Loan (Choice Package) – Residential Investment

Principal and Interest Interest Only
New Rate Old Rate New Rate Old Rate
1 year 3.99% p.a. 4.14% p.a. 3.99% p.a. 4.24% p.a.
2 years 4.19% p.a. 3.90% p.a. 4.19% p.a. 4.00% p.a.
3 years 4.29% p.a. 3.89% p.a. 4.29% p.a. 3.89% p.a.
4 years 4.79% p.a. 3.99% p.a. 4.79% p.a. 3.99% p.a.
5 years 4.79% p.a.

 

Only One In Four Australians Has a Financial Plan

One in two Australians don’t believe they’re doing enough to reach their wealth goals according to new research from MLC, but a boost in confidence and a financial plan may be the key to helping Aussies get on track. However only 1 in 4 had a financial plan within the last 5 years.

The latest MLC Wealth Sentiment Survey released today for the first time identifies the reasons why Australians believe they may not have done enough to reach their goals, finding that self-doubt ranks second to not earning enough money (50% compared with 32%). These two factors were nominated by respondents as more significant than being scared of risk or even spending more than they earn.

Lara Bourguignon, General Manager, Corporate Super, NAB, says the research captures the strong link between confidence and achieving financial goals.

“We often think that getting where we want to go with our money hinges on how much we earn, but self-doubt appears to be a major factor. If we doubt our abilities with our money, it makes sense that we would struggle to achieve our goals.”

Closely tied to the lagging confidence of Australians is the considerable number who do not have a plan to save and invest. Only one in four respondents reported having a financial plan, which MLC says may be a key reason many lack confidence in dealing with money and investments.

“The research highlights an important connection between planning and confidence in reaching financial goals. With so few people having a financial plan, we perhaps shouldn’t be surprised that Australians doubt themselves and don’t believe they have done enough to reach their wealth goals. Having a financial plan is crucial to feeling empowered and getting where you want to go with your money,” said Ms Bourguignon.

For the first time, the survey has also asked Australians to define “wealth”. On average, 33 per cent reported their definition as income, 29 per cent lifestyle wealth, and 24 per cent net worth. The most important aspects of lifestyle wealth were being debt free, having enough for emergencies, and being able to fund our desired lifestyles.

The MLC Wealth Sentiment Survey also identified that while a majority of Australians report a significant shortfall between their anticipated financial needs at retirement and their expected savings and investments, most do not factor their primary residence in calculating their wealth. If Australians included the family home in their wealth, most would have enough once they left the workforce. Despite this, only 11 per cent reported that they planned to sell the family home to fund their retirement.

MLC Quarter 3 Wealth Sentiment Survey – key findings:

    • One in two Australians don’t believe they have done enough to reach their wealth goals
    • The top reasons nominated are insufficient income and self-doubt
    • Australians on average estimate they will need about $818,000 in savings and investments to retire, but expect to retire with only $557,000 (excludes home equity), an average shortfall of $261,000
    • Women face a bigger retirement shortfall than men: $297,000 compared with $226,000
    • If Australians included the equity in their homes, they would have an additional $442,000 in wealth available for retirement
    • Only 11 per cent of respondents say they will sell their homes to fund retirement
    • Four in ten respondents said they can achieve their desired lifestyle on less than $100,000 per year

The MLC Quarterly Australian Wealth Sentiment Survey interviews more than 2,000 people each quarter. It aims to assess the investment environment by asking questions related to current financial situation, investment intentions, level of concern related to superannuation and other investments, change in life insurance, and distance to retirement and investment strategy.