Good Advice

Word clouds are a useful and contemporary way of graphically representing the key words or phrases in a document.

They can also be a great way of accessing the mind of the consumer. In this case the words tell a story of financially savvy people who understand the value of seeking professional advice.

While not all people see advice in this way – there’s a reason why only half the population actually seek professional advice – the word cloud below suggests the financial planning industry could stand to benefit from the harsh lessons learnt by investors during the crisis.

CoreData asked consumers ranging in age from 20 to more than 70 to tell us in 25 words or less the best advice they would give to a friend or family member on how to best approach their financial matters.

The word cloud was created using their responses. The cloud gives greater prominence to words that appear more frequently, providing a snapshot of the way in which the average Australian approaches financial decision-making.

A few words jump out when you glance at the cloud – save, research and invest.

Far from being fail-safe, these three pillars nevertheless provide a solid foundation from which to build wealth.

Australians have always been fairly good at saving. During the financial crisis, people recognised the need to deleverage and very quickly became a nation of net savers.

In the December quarter alone, Australians stockpiled $10 billion in cash, meaning there’s now $474 billion in the system waiting to be invested, according to CoreData’s Australian Cash report Q4 2009.

Other prominent words such as advice, diversify, education, plan and long-term indicate the industry’s catch cry of ‘time in the market, not timing’ is getting through.

“Make sure you understand what you are buying – if not, seek professional advice,” said one 44-year-old male respondent from WA.

Another male respondent, aged 52 from Queensland, said: “Financial education is the key – read widely, learn from others successes and mistakes, listen to professional advisers and ask lots of questions.  Do not rush in.”

The economic forecast in Australia is for clear skies ahead, with interest rates expected to rise progressively throughout 2010.

One Comment on “Good Advice”

• February 11, 2010 at 7:22 am
  Andrew McLintock says:

  Where can we get a copy of this book?

  T 07 4639 1200

  M 0407 968 816

  Ta

  Reply