Education affordability is becoming an issue of great concern for many families across Australia and may eventually be a main focus for financial advice, according to Lifeplan head Matt Walsh.
“This issue is gradually gaining momentum. Over the last decade we had inflation around 3 per cent [per year] while education costs increased at 5 per cent [per year],” Walsh said.
“So it has outpaced inflation and wages growth,” he said.
The financial services industry has largely ignored the issue until now, preferring to concentrate on interest rates and housing affordability, Walsh said.
Unlike these other two matters, children’s education is probably the most emotive issue families need to address, he said.
One positive outcome the concern over the price of education will potentially have is presenting financial planners with an opportunity to attract younger clients to their practices.
“We’re seeing financial planners understanding they play a big role in this issue now,” Walsh said.
One potential solution to the problem is an investment in education bonds, and offering these types of products can help a financial planner’s advice proposition.
“When you’ve got a solution that can actually provide a tax advantage which is almost equal to a year’s university fees, versus using a unit trust, then that suddenly switches on the advice proposition for a family,” Walsh said.
