We Wealth | June 2022

The number of people adhering to supplementary welfare programmes (today 27%) has been increasing more among the clients of financial networks than among the rest of the population. However, the collection data of pension funds and PIPs (individual pension schemes) reveals that such percentage oscillates between a mere +2% and +3%.

Italians have always had a difficult relationship with supplementary pension schemes, despite them being aware that INPS pensions are not nearly enough to uphold the same lifestyle after their retirement.

If, on the one hand, the demand is rather weak, the supply is not stellar either. In fact, financial advisors, bankers, brokers, and agents have a key role and they should work to increase the level of awareness towards the issue of welfare, especially among youngsters.

The work of financial professionals is essential in promoting a better financial education in the field of welfare – 72% of clients have never discussed welfare with their financial advisor (81% last year).

The role of financial professionals and, in particular, of financial advisors is fundamental, especially in their client’s choice of the right supplementary welfare programme: the longer the time horizon available, the higher the risk profile and profit.

The surveys conducted by Finer reveal some data which demonstrate a slight increase in the general level of awareness: from 75% (one year ago) to 79% among 55 to 66-year-old people, who are aware of such issues; from 52% to 55% among 45 to 54-year-old people and from 28% to 31% among 30 to 35-year-old people.

These data can be explained considering the lightheartedness and few financial resources available to young people. This is, however, completely irrational: 30 to 35-year-old people should be highly concerned with the issue of welfare; moreover, they can save earlier and thus better.

This is, for the most part, an Italian cultural problem. 39% of Italians think that pension schemes are not an issue (42% one year ago): should they lack liquid assets, they would either keep working or sell real estate. 22% (17% one year ago) state that, in case of lack of resources, they would adapt their standards of living accordingly.

In addition to cultural obstacles, there are other issues such as costs, transparency, and accessibility. While Italians have more trust in supplementary pension (66%) than in state pension (34%), it takes a trustworthy and knowledgeable advisor to benefit from the former.

The level of trust in financial advisors and their reliability are key. Over half of Italian people (52%) claim to be unable to define the best pension plan for their needs.

The role of the financial advisor as a cultural mediator is central, as, among the obstacles, there is often lack of understanding and lack of trust in the supply.

On closer inspection, the issues of the excess to liquid assets on checking accounts (2.000 billion), the lack of propensity to insurance (only 10% are adequately protected from basic risks such as civil liability, life, and health) and the lack of active attention towards supplementary welfare programmes are all connected.

Unravelling this tangle takes a financial professional able to gain the trust of clients. The rest, we suspect, has little importance.

Nicola Ronchetti