retirement readiness from mindset to action the ......state street global advisors 5 key insights...

THE AUSTRALIAN RETIREMENT VISION SURVEY

Retirement Readiness from Mindset to Action

3 The Retirement Challenge

4 Australians’ Vision for Retirement6 Lifestyle Expectations

6 Lifestyle Concerns

8 Income Expectations

8 The Benefits of Financial Advice

10 Funding Retirement Lifestyles12 The Lump Sum Super Myth

14 Diversifying Income Sources in Retirement

16 Designing a Retirement Income Strategy18 Choosing the Optimal Investment Approach

19 Balancing Investment Risk

20 Building Knowledge for Informed Decision-making22 Bridging the Superannuation Knowledge Gap

23 The Need for Information and Advice

24 Understanding Retirement Products

25 Retirement Readiness27 The Retirement Readiness Gap

29 Demonstrating the Value of Advice

30 Meeting the Retirement Challenge32 SSGA Retirement Lifestyle Solutions

33 SPDR® Exchange Traded Funds by SSGA

34 Appendices34 The Retirement Market in Australia

35 About the Research

3State Street Global Advisors

THE RETIREMENT CHALLENGEThe nature of retirement in Australia is changing. We’re living longer and staying healthier as we age — but we’re also more active and engaged. As a result, Australians’ financial needs in retirement are also evolving, creating challenges for governments, product providers, financial advisers and Superannuation investors alike.

In this whitepaper, we investigate the changing nature of Australians’ vision for retirement and the challenges Super investors face as they prepare for life outside the workforce. We also consider some of the ways financial advisers can respond to their changing needs.

While our research reveals much that is positive, it also highlights some key barriers that must be overcome if Australians are to achieve the retirement lifestyles they expect.

A significant proportion of Super investors remain confused about the nature and purpose of the Superannuation system, while many are uncertain whether their investments will allow them to achieve their goals. Others lack clear objectives or a plan for developing and achieving them.

Personalised financial advice is an important part of the solution. In fact, our research clearly reflects the value of professional advice in educating, empowering and supporting everyday Super investors in setting and achieving realistic

lifestyle goals. Yet it also shows that many remain uncertain or unaware of the value financial advice can bring — creating both a challenge and an opportunity for advisers.

Our research also reaffirms that investors want to interact with their advisers in a variety of ways, underscoring the need for flexible and scalable advice models that can cater to both self-directed decision-makers and more traditional, holistic advice clients.

At the same time, the changing nature of retirement is set to drive the development of a wider range of pension and investment solutions, designed to meet the diverse needs of a growing investor base. One aspect of this evolution is the growing demand for allocated pension products and other income streams, which our research shows is likely to continue over the years ahead. Yet there is also a need for diversified lifestyle solutions that combine regular income with ongoing capital growth, protecting capital against inflation during retirements that can now span decades. And our research also shows that some of Australia’s most knowledgeable Super investors also prefer to diversify their portfolios with direct investments outside Super.

State Street Global Advisors (SSGA), has sought to meet both of these needs. You can read more about our solutions in the conclusion to this whitepaper.

Unadvised (%) Advised (%)

Feel confident or very confident and they will meet retirement goals

25.7 48.4

Don’t feel confident or not at all and they will meet retirement goals

39.3 19.5

4

The Australian Retirement Vision Survey | August 2015

4

AUSTRALIANS’ VISION FOR RETIREMENTWhile most Australians expect to maintain their current standard of living in retirement, many are concerned about the potential impact of legislative change. And despite surprisingly high income expectations in the lead up to retirement, most retirees are satisfied with their financial situation — especially those who have benefited from financial advice.


Key InsightsAround two in three Australians expect their standard of living to remain unchanged after they retire, although more than a quarter are concerned that it will decline. Pre-retirees aged 45 to 60 are the most pessimistic, suggesting that concerns become more acute as we approach retirement.

Nonetheless, the number one concern for retirees and pre-retirees is their ongoing uncertainty about the potential for changes in the Superannuation system. As a result, navigating regulatory complexity is a key area where clients can benefit from advice. Longevity risk also remains a key concern, especially among Generations X and Y.

In general, Australians have high expectations for their post-retirement incomes. In our survey, the median expected weekly income in retirement was more than double the minimum income for a modest retirement under the Association of Superannuation Funds of Australia (ASFA) Retirement Standard, and around 28% higher than the recommended income for a comfortable retirement.

Despite these high expectations in the lead up to retirement, most retirees are happy with their financial situation. Two-thirds say their standard of living has not changed since retirement, with a significant minority reporting that their lifestyles have actually improved. Those who have received financial advice are substantially more likely to report an improved standard of living.

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Lifestyle ExpectationsOur research shows that Australians overwhelmingly expect their current lifestyles to continue when they leave the workforce. Across all age groups, 6 out of 10 Australians expect their current standard of living to remain the same after they retire.

Yet there are also indications that our expectations become more realistic as we approach retirement. Generation Y, the segment furthest from retirement, are the most optimistic about their post-retirement incomes, with more than one quarter (26.9%) expecting to be better off after they retire. In contrast, only 12% of Generation X and 6.2% of Baby Boomers believe their standard of living will improve when they finish working.

Similarly, pre-retirees are most likely to anticipate a fall in their living standards when they retire — with 32.7% of Generation X investors and 24.4% of Baby Boomers saying they believe their standard of living will be worse, rather than better.

Lifestyle ConcernsThe Impact of Legislative UncertaintyDespite the ongoing media focus on Superannuation performance in the wake of the global financial crisis, the major concern for Super investors is not underperformance, but the potential for further change to Superannuation rules.

Asked to name their single greatest concern about their retirement savings, two in five Superannuation investors nominated changes to Superannuation legislation. This figure rises sharply among older investors, including 44.3% of Baby Boomers and over half of pre-Boomers.

Asked to name their single greatest concern about their retirement savings, two in five Superannuation investors nominated changes to Superannuation legislation.

Figure 1: Optimism Tempered by ExperienceHow do you expect your standard of living in retirement to compare to your current living standards?

n Better n Same n Worse

27%

18%

55%

Generation Y

24%

6%

69%Generation X Baby Boomers55%

33%

12%

Source: SSGA, Rice Warner, as at 31 July 2015.


Remarkably, the better informed the investors, the more concerned they are about legislative uncertainty. More than 63% of investors who described themselves as extremely knowledgeable about Superannuation and investments named legislative change as their number one concern, along with 57.8% of High Net Worth (HNW) investors. Similarly, 40.8% of advised investors said that legislative change was their greatest concern, indicating that understanding and navigating regulatory change is a key service advisers can offer their clients.

Managing Longevity RiskUnsurprisingly, running out of money in retirement was also a key concern, nominated by 27% of investors. Interestingly, this concern was at its highest among Generations X (33.8%) and Y (39%), reflecting an increasing awareness among younger investors of the need to build significant retirement savings. That suggests that these investors could benefit from a targeted advice offering designed to help them start preparing for retirement earlier in life.

Figure 2: One in Three are Concerned About Legislative ChangeWhat’s your greatest concern about your Superannuation/retirement savings?

n Changes to Superannuation legislation by the Governmentn Underperforming your main investment option's performance objective

n Loss in portfolio balancen Running out of money in retirementn Not having enough retirement savings for the life you are accustomed to

Male Female Generation Y Generation X Retirees Pre-retireesTotal

21.1%

27.0%

8.7%5.1%

38.2%

18.6%

23.8%

9.5%5.4%

42.6%

24.0%

30.7%

7.6%4.7%

32.9%

27.0%

39.0%

6.0%4.0%

24.0%

32.4%

33.8%

6.6%4.0%

24.0%

14.1%

22.3%

10.6%

5.8%

47.1%

27.4%

31.3%

6.9%4.5%

30.0%


Figure 3. More Knowledgeable Investors Are the Most Concerned What’s your greatest concern about your Superannuation/retirement savings?

Not

at a

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Very

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Core

affl

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HNW

Knowledge of Superannuation and Investments Advised or Unadvised Wealth Segments

34.3%

47.6%

3.5%2.1%12.6%

20.3%

24.4%

10.6%

7.2%

37.4%

13.4%

12.9%

4.9%

10.7%

58.0%

10.2%

8.2%

8.2%

10.2%

63.3%

18.0%

26.4%

9.7%5.2%

40.8%

25.1%

27.8%

7.3%5.0%

34.7%

28.1%

36.9%

4.7%5.0%

25.3%

21.8%

28.4%

4.4%

9.8%

35.6%

17.6%

20.8%

9.5%5.9%

46.2%

10.4%

12.1%

13.3%

6.4%

57.8%

n Changes to Superannuation legislation by the Governmentn Underperforming your main investment option's performance objective

n Loss in portfolio balancen Running out of money in retirementn Not having enough retirement savings for the life you are accustomed to


8


Income ExpectationsOverall, Australians have high expectations for their post-retirement incomes. Across our survey sample, the median income investors believed would be required to maintain their desired lifestyle was $982 a week — well above the amount recommended by the ASFA Retirement Standard for both a modest lifestyle ($443 a week) and a comfortable lifestyle ($767 a week). That suggests that many investors may risk being unnecessarily discouraged by high income expectations, and would benefit from professional advice in setting more realistic retirement income targets.

Those who have benefited from financial advice are content with their financial situation.

The Benefits of Financial AdviceDespite these high expectations, most retirees are content with their financial situation — especially those who have received financial advice.

Sixty percent say their standard of living has not changed significantly since retiring, a figure broadly in line with the expectations of those who haven’t yet retired. In addition, more than one quarter (26.4%) believe their standard of living has actually improved, outpacing the expectations of pre-retirees.

Those who have benefited from financial advice are particularly likely to have outperformed. More than 29% of retirees who have received financial advice say their living standards have improved since leaving the workforce, compared to just 21.7% of unadvised retirees.

About 29% of retirees who have received financial advice say their living standards have improved since leaving the workforce, compared to just 21.7% of unadvised retirees.

Figure 4: High Expectations Among Pre-retirees Weekly (median) required income for retirement

Total

Generation Y

Generation X

Baby Boomers

Extremely Knowledgeable

Not Knowledgeable

Advised

Nonadvised

ASFA Modest

ASFA Comfortable

0 400 800 1,200

$982

$985

$1,039

$923

$1,372

$836

$1,065

$888

$443

$767

1,600$


Figure 5: Satisfied Retirees How has your standard of living changed in retirement?

Worse

Same

Better 26.4%

60.1%

13.5%


Figure 6: The Benefits of Advice How has your standard of living changed in retirement?

12.9%

14.5%

58.0%

63.8%

29.2%

21.7%

Worse

Same

Better

Advised RetireesUnadvised Retirees


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FUNDING RETIREMENT LIFESTYLESWhile Australians continue to draw on a wide range of income sources in retirement, the mix is changing. A growing shift towards allocated pensions and annuities has already reduced the level of retirement savings taken as a lump sum, as retirees seek to lock in a long-term income stream for lengthening retirements. Nonetheless, many still expect to rely on the age pension as their main income source.


Key InsightsDespite a persistent misconception that most Australians spend their Superannuation as a lump sum before relying on the pension, our research reveals that fewer than 20% of investors plan to do so. The remaining 80% expect to convert all or part of their Super into an income stream in the form of an allocated pension or annuity, reflecting a growing trend towards more effective income planning.

However, unadvised and less knowledgeable investors are still relatively more likely to withdraw their Super as a lump sum rather than an income stream — and are thus more likely to become dependent on the age pension at some point in retirement.

As a result, our research suggests that advisers play a valuable role in helping investors create a sustainable income for an extended retirement, enhancing their financial independence.

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The Lump Sum Super MythThere is a persistent view that Australians overwhelmingly withdraw their Superannuation savings as a lump sum at retirement, using them to pay down debts and take holidays before turning to the age pension for a regular income. However, our research comprehensively disproves this lump sum Super myth.

We found that only 17.9% of Australians plan to withdraw their Superannuation as a lump sum to pay down debts — and that this number falls even further as we approach retirement. Instead, pre-retirees report a strong preference for creating long-term income streams through allocated pensions or annuities. More than one quarter of investors plan to access all

of their Super through an allocated pension, while a further 18% intend to withdraw a partial lump sum and withdraw the remainder as a pension.

These preferences are reflected in the actual behaviour of current retirees. Just 12.9% of retirees have chosen to withdraw all of their Super as a lump sum to pay down debts. Overall, $80 in every $100 paid as a retirement benefit is taken as a pension.

Nonetheless, there is a strong correlation between higher balances and pension streams. The higher the Super balance, the less likely the member is to take their savings as a lump sum. Self-Managed Super Funds (SMSF) investors are also more likely to invest in a pension than retail and industry fund members, reflecting their higher balances overall.

Figure 7: Investors Seek a Sustainable Income in Retirement When you retire do you plan to take your Superannuation as a lump sum, or retain and draw an income?

n Withdraw in full as a lump sum and pay down debtn Withdraw part as a lump sum and draw an income from an Allocated Pensionn Retain all of it and draw as an income from an Allocated Pension

n Withdraw part as a lump sum and draw an income from an annuity

n Retain all of it and draw as an income from an annuity

n Other

Total Generation Y Generation X Baby Boomers Pre-Boomers

17.9%

18.0%

26.9%

12.6%

16.6%

8.0%

25.8%

23.7%

21.5%

7.5%

16.1%

5.4%

16.5%

18.4%

26.3%

17.3%

13.9%

7.5%

17.3%

16.0%

28.6%

10.6%

18.5%

8.9%

10.0%

25.0%

25.0%

15.0%

15.0%

10.0%



Just 12.9% of retirees have chosen to withdraw all of their Super as a lump sum to pay down debts.

Advised Clients Seek Long-term IncomesAmong both pre-retirees and current retirees, financial advice plays a major role in driving better long-term outcomes in retirement. Advised investors are more likely to access most of their Super as an allocated pension in retirement, including 41.2% of current retirees (compared to 33.8% of unadvised investors) and 37.4% of pre-retirees (compared to 34.7%). But advised investors are also more likely to use some of their Super to travel, renovate their homes or support their families, suggesting that they are in a better position to realise their broader financial goals while still supporting a comfortable retirement lifestyle.

Figure 8: More than $80 in $100 Paid as a Retirement Benefit Is Taken as a Pension Retirement rollovers and benefit payments — estimated split

Assets Accounts

($b) (%) (‘000) (%)

Lump Sum 9.23 16.7 224 58.9

Pension 46.14 83.3 156 41.1

55.36 381


Figure 9: Men Are Slightly More Likely than Women to Convert Their Super into an Income Stream Retirement rollovers and benefit payments broken down by gender (including SMSFs)

Assets Accounts

Male Female Male Female

Lump Sum 17.8 20.7 61.7 63.9

Pension 82.2 79.3 38.3 36.1

Total 100.0 100.0 100.0 100.0


Figure 10: Advised Clients Prefer Income StreamsHow will/do you use your retirement Superannuation fund payment?

n Draw Down Regularly as an Income n Traveln Pay Down Debtn Home Renovations

n Support Children/familyn Property Purchasen Investments in Sharesn Invest in a Term Deposit n Don't know

n Othern Leave Most of it in the Super Fund

as an Allocated Pension and Draw Down Income

33.8%

36.3%

20.6%

14.2%

8.8%

5.9%

5.9%

15.2%

12.3%

6.4%

9.8%

34.7%

28.4%

19.2%

19.2%

7.6%

6.0%

8.5%

8.2%

19.9%

2.2%

2.5%

37.4%

32.9%

25.8%

15.2%

8.7%

5.8%

9.4%

12.9%

10.3%

12.3%

1.3%

41.2%

48.2%

29.5%

7.6%

10.0%

8.1%

6.0%

15.7%

9.2%3.3%4.9%

Advised Retirees Unadvised Retirees Advised Pre-retirees Unadvised Pre-retirees


14


Advised investors are more likely to access most of their Super as an allocated pension in retirement.

Diversifying Income Sources in RetirementAustralians rely on a remarkably diverse range of income sources in retirement — from rental income to reverse mortgages. Nonetheless, the government age pension remains the most frequently used source of retirement income, with 44% of current and future retirees intending to rely on the government pension for at least some of their income.

Other popular sources of income include dividends (31.1%), paid employment (26.1%) and, notably, account-based pensions (25.1%).

However, while more than a third of retirees receive income from account-based pensions, only 16.6% of pre-retirees currently expect to use them in retirement, highlighting a significant gap in general awareness of pension income streams.

Once again, our research also reveals a marked difference between those who have received advice and those who haven’t, with advised investors much more likely to draw income from transition to retirement pensions, allocated pensions, dividends and non-Super investments. As a result, they are significantly less likely to depend on the age pension in retirement.

Advised investors are much more likely to draw income from transition to retirement pensions, allocated pensions, dividends and non-Super investments. As a result, they are significantly less likely to depend on the age pension in retirement.

Account-based Pensions: The Knowledge GapDespite the growing popularity of account-based pensions, our research suggests a continuing knowledge gap that may prevent some investors from taking full advantage of their potential.

Among retirees with allocated pensions, only 17.7% rely on their pension exclusively for all of their everyday spending. Yet 100% of investors who describe themselves as extremely knowledgeable rely on an allocated pension for much or all of their retirement income, compared to just 50% of those who say they are not all knowledgeable, half of whom rely heavily on the age pension.

Once again, advisers can play a role in bridging the knowledge gap, with 18.3% of advised retirees relying exclusively on their allocated pensions, compared to 16.1% of their unadvised peers.

Figure 11: Highly DiverseWhat different sources of retirement income will you/ do you depend on?

Total Male Female Retirees Pre-retireesGender Retirement Status

n Othern Investments outside supern Home equity releasen Transition to retirement pensionn Rental incomen Dividendsn Government age pensionn Account based pensionn Paid employment

26.10% 24.90% 27.50% 13.60%37.50%

16.60%

41.50%

22.60%

21.90%

16.90%

29.20%

34.40%

46.80%

40.30%

16.40%

15.20%

34.90%

19.30%

45.50%

26.40%

20.00%

15.10%

30.20%

30.00%

42.80%

35.10%

18.60%

16.90%

33.40%

25.10%

44.00%

31.10%

19.30%

16.10%8.00% 8.50%

7.50%5.80% 10.00%

3.20%6.30%

4.90%4.50%

31.90%

4.70%



Figure 13: More Knowledgeable Retirees Rely on Allocated PensionsDoes the allocated pension you are invested in provide the income that you need for your regular spending and lifestyle needs? %

n I only rely on it to a small extent and rely more heavily on rental income from property investments

n I only rely on it to a small extent and rely more heavily on dividends from investment

n I only rely on it to a small extent and rely more heavily on the age pension

0

40

80

120

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Core

affl

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HNW

Gender Wealth SegmentsAdvised or UnadvisedKnowledge of Superannuation and Investments

n I rely on it exclusively

n It contributes substantially to my total income, together with other sources of income

17.70% 20.00% 12.90%

50.00%

15.10% 15.20%

65.20%

54.50%

18.30% 16.10%27.30%

13.60% 14.00% 17.90%

66.70%

7.70%7.70%

74.00%

6.00%6.00%

47.50%

30.50%

6.80%

38.60%

29.50%

57.10%

16.10%

8.90%1.80%

2.30%1.70%2.30%

56.70%

16.50%

7.30%

1.20%

45.50%6.10%

12.10%

63.40%

17.20%

50.00%

57.10%

21.40%

5.70%

56.70%

14.00%

6.00%3.30% 2.90% 1.10%

3.20% 1.50%

56.80%

16.40%

5.90%3.20%


Figure 12: Advised Investors Rely Less on the Government Age Pension for Retirement IncomeWhat different sources of retirement income will you/ do you depend on?

Not

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Core

Affl

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HNW

Knowledge of Superannuation and Investments Advised or Unadvised Wealth Segments

n Othern Investments outside Supern Home equity releasen Transition to retirement pension

n Rental incomen Dividendsn Government age pensionn Account based pensionn Paid employment

31.50%

8.40%

57.30%

7.00%10.50%4.90%6.30%8.40%7.70%

22.30%

40.20%

32.10%

54.90%

25.90%

20.50%8.50%

49.10%

4.00%

30.60%

30.60%

22.40%

40.80%

16.30%12.20%14.30%

44.90%

8.20%

24.60%

27.10%

42.00%

35.30%

21.90%

19.60%8.20%

36.20%

4.10%

28.00%

22.50%

46.60%

25.50%

15.70%

11.50%7.70%

26.30%

5.40%

34.40%

17.20%

61.10%

13.90%10.60%13.90%7.50%16.40%6.10%

27.40%

22.40%

51.70%

24.90%

14.50%

17.00%10.70%

30.00%

4.40%

21.70%

33.90%

39.80%

41.60%

21.70%

16.30%6.30%

38.50%

2.30%

16.20%

37.60%

5.20%

61.80%

40.50%

17.90%8.10%

63.00%

5.20%


16


DESIGNING A RETIREMENT INCOME STRATEGYDespite high expectations around retirement incomes, an overwhelming majority of Australians exhibit a low risk appetite when it comes to investing their Superannuation. As a result, without advice they may miss out on opportunities to achieve their lifestyle goals through better investment choices and retirement product selection.


Key InsightsGenerally, Australians take a conservative approach to their Superannuation investment strategy. While this may help minimise short-term market risk, it ignores the very long period that most Australians will spend in retirement, reducing the likelihood that they will achieve their lifestyle goals.

Investors who are more knowledgeable are more likely to select higher growth options, despite short-term risk. In contrast, less knowledgeable investors often prefer cash investments that have underperformed in a low interest rate environment.

Advisers play a critical role in building investor confidence and empowering more informed investment decisions, enabling investors to achieve an optimal balance between risk and return.

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Choosing the Optimal Investment ApproachTwo out of three Australians (68.8%) prefer to take a conservative approach to their Superannuation investment strategy, with a focus on dividends rather than long-term growth. That includes 74.5% of retirees and a surprisingly high 63.6% of investors in the accumulation stage.

There is a strong correlation between (self-assessed) investment knowledge and risk appetite. Only 5.6% of investors who describe themselves as “not at all knowledgeable” say they prefer a higher risk investment strategy despite short-term volatility, compared to 36.7% of “extremely knowledgeable” investors. Meanwhile, 28.7% of the “not at all knowledgeable” say they prefer to invest in cash and term deposits — a strategy likely to prove an obstacle to building retirement savings in the current low interest rate environment. This is a powerful illustration of the way in which a lack of investment knowledge and professional advice can lead to poor retirement outcomes.

Two out of three Australians (68.8%) prefer to take a conservative approach to their Superannuation investment strategy, with a focus on dividends rather than long-term growth.

Risk Appetite and Exposure to Growth AssetsThe potential impact of an overly conservative approach to risk was clearly demonstrated in a recent benchmarking study by Rice Warner, which analysed over nine million member records across 18 of Australia’s largest Superannuation funds.

The study showed that members who had actively selected an investment option consistently chose a lower mix of growth assets than the default asset allocation recommended by the fund — sometimes 20 to 30% lower.

Figure 14: Risk Appetite Increases with Investment KnowledgeWhen it comes to your Superannuation, to what extent do you agree with the following statements?

%

0

40

80

120

Advised or Unadvised

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affl

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HNW

Retirement Status Knowledge of Superannuation and Investments

Wealth Segments

n I prefer investment in cash and term deposits.

n I prefer a conservative investment strategy that minimises the chances of poor performance but delivers consistent dividends

n I prefer a more risky investment strategy even though it may mean my balance goes up and down.

14.40% 12.20% 16.40% 5.60% 15.90% 20.10%36.70%

12.70% 16.70% 10.80% 14.50% 13.60%24.90%

69.90%

5.20%

67.90%

18.60%

69.70%

15.80%

65.60%

23.60%

64.30%

19.00%

72.30%

15.00%

40.80%

22.40%

67.90%

12.10%

70.30%

13.80%

65.70%

28.70%

63.60%

19.90%

74.50%

13.30%

68.80%

16.80%


Figure 15: Investors Who Choose Super Options Have Fewer Growth AssetsSuperannuation fund (excluding SMSFs) exposure to growth assets — default and choice members

Age BandExposure to Growth Assets

by Default Members (%)Exposure to Growth Assets

by Choice Members (%)

Under 25 86 72

25–29 86 73

30–34 85 75

35–39 85 77

40–44 85 75

45–49 84 75

50–54 82 64

55–-59 79 57

60–64 74 49

65+ 73 42

All age bands 82 64



The research also shows that women tend to be significantly more conservative than men when choosing their investment strategy. Their aversion to risk has obvious negative implications for female retirement savings, which already tend to be substantially lower than male balances. This disparity is due to the financial obstacles women face in accumulating wealth through their working lives, including lower average wages, more frequent career breaks and a greater propensity for part-time work.

As a result, female investors are in particular need of financial advice to overcome the gender Super gap.

Balancing Investment RiskOur survey shows that less than half of Australian Super investors are willing to take on even moderate levels of investment risk, significantly impairing their ability to reach their long-term lifestyle goals. These findings are surprisingly consistent across age groups, with even Generation Y investors proving highly risk averse.

However, there are exceptions, including high net worth individuals and “extremely knowledgeable” investors, 77.5% of whom are willing to take on moderate to high levels of risk.

Less than half of Australian Super investors are willing to take on even moderate levels of investment risk, significantly impairing their ability to reach their long-term lifestyle goals.

The Role of Advisers: Strengthening Confidence Around Risk ManagementOur research suggests that Australians who receive advice are significantly more confident in their ability to manage higher levels of investment risk, compared to the non-advised. For example, only one in 10 of advised retirees were unwilling to take any risk whatsoever, compared to 23.7% of the unadvised.

Figure 16: Greater Financial Knowledge Leads to Higher Confidence in Managing Investment RiskHow would you best describe your tolerance for taking investment risk where risk is defined as the potential for loss in capital value?

%

0

40

80

120

n Moderate risk n High riskn Somewhat high risk

%

n Slight riskn No risk

Tota

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Core

affl

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Knowledge of Superannuationand Investments

16.30%40.60%

8.50% 8.90% 8.20% 10.90% 23.40% 23.10% 15.80% 10.90% 6.40%

29.50%

49.70%

9.80%

33.00%

8.10%

4.50% 4.60%

43.40%

36.90%

35.60%

8.50%

31.40%

33.30%

7.50%

4.70% 3.20%

28.00%

36.50%

36.70%

40.20%

8.10% 7.70%4.40%

14.30%

30.60%

26.50%

20.40%

21.40%

50.40%

12.50%

6.70% 4.10%

34.10%

48.80%

7.00%

26.60%

22.40%

5.60%

4.90% 1.70%

32.90%

38.60%

7.90%

4.30%

Wealth SegmentsAdvised orUnadvised


Figure 17: Building Confidence: Advice and Risk AppetiteHow would you best describe your tolerance for taking investment risk where risk is defined as the potential for loss in capital value?

%

n High riskn Somewhat high riskn Moderate riskn Slight riskn No risk

0

40

80

120

Advisedretirees

Unadvisedretirees

Advisedpre-retirees

Unadvisedpre-retirees

Retirees Pre-retirees

11.70% 23.00%10.00%

23.70%

29.30%

36.60%

6.30%

40.60%

34.50%

9.70%

26.00%

36.30%

9.80%

33.30%

45.00%

6.80% 3.30% 4.90% 5.20% 4.10%


20


BUILDING KNOWLEDGE For Informed Decision-makingWhile many Australians believe they have a high level of knowledge about Superannuation and investment, a significant proportion remains uncertain and confused about the role and purpose of Superannuation and their options for retirement. Many would appreciate support and guidance to help make more informed investment decisions.


Key InsightsWhile a majority of Australians see Superannuation as a retirement savings vehicle, it is clear that younger Australians and other less engaged investor segments see Superannuation primarily as a government mandated scheme. As a result, they fail to recognise its importance in funding their retirements, along with their own role in building and managing their retirement savings.

At least a third of investors lack an understanding of basic Superannuation concepts, revealing a continuing knowledge gap with the potential to affect the retirement outcomes of millions of Australians.

Advised investors are much more likely to see Super as important and to make personal contributions at critical stages, helping them meet their objectives and achieve better retirement outcomes.

More positively, investors’ understanding of allocated pensions appears to be growing, although there is still confusion and some misunderstanding of other retirement products and solutions.

More than two in five investors would like information about retirement options to support their decision-making. This growing demand for guidance presents a significant opportunity for advisers, especially as the population ages.

22


Bridging the Superannuation Knowledge Gap Ultimately, knowledge is the key to well informed retirement decisions. But while many Australians have a high level of confidence about their knowledge of Superannuation and investments, there are still significant knowledge gaps.

While more than half of Australians see Superannuation as an important savings vehicle for retirement, 40% of Generation Y investors view Super as simply a government mandated scheme that holds little interest for them. In contrast, 64% of Baby Boomers see Super as a retirement savings vehicle which they can personally control.

In addition, our study shows that at least one third of investors lack a general understanding of basic Superannuation concepts, leading to higher levels of disengagement and apathy. And while almost 60% believe that they are “somewhat”, “very” or “extremely” knowledgeable about Super and investments, those figures are largely driven by the older Australians with a greater propensity to seek advice.

One third of investors lack a general understanding of basic Superannuation concepts, leading to higher levels of disengagement and apathy.

Figure 18: Savings Vehicle or Government SchemeWhat is Superannuation to you?

20.3%

30.8%

56.6%

n A Government mandated contribution my employer makes to a Fund of their choice that I have little current interest in

n A tax-effective savings vehicle to assist me in Retirement

n An important savings vehicle for my Retirement where I have full control and interest in its investments


Figure 19: Many are Uncertain About Basic Superannuation Concepts

65.5%Do you know the choices available to you in Super? 34.5%

Do you know how much you can contribute to Super each year?

62.0%

38.0%

Do you know when you can access your Super based on you birthdate?

68.4%

31.6%

Do you know the tax rate for contributions and earnings?

54.3%

45.8%

YesNo


Figure 20: Advice Brings ConfidenceHow would you describe your level of knowledge with regards to Superannuation and investments

Tota

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Gene

ratio

n Y

Gene

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n X

Baby

Boo

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s

Pre-

Boom

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Retir

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retir

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Advi

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Unad

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HNW

n Extremley knowledgeablen Very knowledgeablen Somewhat knowledgeablen Slightly knowledgeablen Not all knowledgeable

4.10%

18.7%

34.5%

30.8%

11.9%

5.00%

16.0%

19.0%

34.0%

26.0%

5.2%

9.7%

29.7%

37.9%

17.6%

3.7%

21.0%

37.8%

28.6%

8.9%

2.7%

29.7%

40.5%

23.4%

3.6%

4.0%

25.7%

38.9%

24.8%

6.6%

4.1%

12.3%

30.5%

36.4%

16.7%

3.7%

20.9%

39.5%

29.0%

6.9%

4.6%

15.7%

28.0%

33.2%

18.4%

9.2%

38.2%

39.3%

11.0%

2.3%

Generation Retirement Status Advice Wealth



The Need for Information and AdviceDespite this knowledge gap, an overwhelming majority of Australians would like to manage their own finances, although most would also like expert guidance and support to empower their decision-making. As a result, investors continue to seek information from a variety of sources — with older, retired and higher net worth individuals most likely to select financial planners as their key source support.

Advised Investors are Most Likely to Top up Their SuperUnsurprisingly, the most knowledgeable and engaged segments are the most likely to make extra contributions to their Super accounts. Overall, 40.6% of investors made personal contributions to their Super in the 12 months before the survey, with that figure largely driven by older and higher net worth investors.

Advised investors are particularly likely to make personal contributions: almost half have boosted their Super in the last year, compared to only one-third of unadvised investors. In the crucial pre-retirement stage, 48.1% of advised investors topped up their Super, compared to just 32.5% of unadvised pre-retirees.

As a result, it’s clear that financial advice plays a critical role in helping Australians achieve their goals in retirement — by building confidence, encouraging additional Super contributions and educating investors about the substantial benefits of taking responsibility for their Super savings.

Figure 21: Financial Advice and Extra Super Contributions Did you make any personal contributions to your Superannuation Fund in the last 12 months

Tota

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Fem

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Retir

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retir

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Gender RetirementStatus


Advised orUnadvised

Wealth Segments

n Not suren Non Yes

2.2%

57.3%

40.6%

1.8%

52.7%

45.5%

2.6%

61.9%

35.5%

5.1%

52.9%

42.0%

1.4%

58.4%

40.2%

3.3%

82.0%

14.8%

2.8%

52.4%

44.8%

3.3%

26.7%

70.0%

2.7%

50.1%

47.2%

1.6%

65.3%

33.1%

1.6%

70.5%

28.0%

2.3%

57.0%

40.7%

0.7%

45.3%

54.0%

3.3%

36.3%

60.4%

41.6%

58.4%


24


Understanding Retirement ProductsGiven investors’ patchy understanding of Super, it’s not surprising that many have only a slight understanding of retirement products like pensions, annuities and capital protected investments. Nonetheless, the proportion of investors with at least some knowledge of retirement products is significant and growing.

Of all retirement products, Super investors are most likely to report a strong understanding of allocated pensions, especially retirees, high net wealth individuals and advised investors. The least understood products are protected products and deferred annuities — helping to explain the relative unpopularity of these solutions.

Transition to retirement pensions are also much less understood than allocated pensions, highlighting the need for greater awareness and education in this area by financial planners and product providers. Overall, advised investors have a significantly stronger understanding of every product type than their unadvised peers.

Figure 22: Retirees Have a Better Understanding of Retirement Products Than Pre-Retirees Understanding of retirement products split by retirement status

0

1

2

3

4

5 Allocated Pensions

Lifestyle Investment Options

Lifetime Annuities

Transition to Retirement Pensions

Deferred Annuities

Longevity Risk Pooling Products


— Retirees — Pre-retirees

Figure 23: The Wealthier an Investor, the Better Their Understanding of Retirement Products Understanding of retirement products split by wealth segment

0

1

2

3



Lifetime Annuities


Deferred Annuities



— Mass Market — Mass Affluent — Core Affluent — HNW

4

Figure 24: Financial Advice Strengthens Understanding of Retirement Products Understanding of retirement products split by wealth segment

0

1

2

3

4



Lifetime Annuities


Deferred Annuities



— Advised — Unadvised

Key: On a scale of 1-5 (1 being the lowest and 5 being the highest)


RETIREMENT READINESSWhile most Australians may recognise the importance of planning for retirement, few have established clear objectives. This lack of retirement readiness is linked to a widespread uncertainty and lack of confidence, indicating that many would benefit from professional advice.

26



Key InsightsMore than half of Australians do not have any goals or objectives for retirement, revealing an overall lack of planning and strategy. As a result, many feel they are not on track to achieve the retirement lifestyle they desire.

Younger investors and those with less financial knowledge are the most disengaged from the Superannuation system. This means many are missing out on opportunities to boost their Super while they have time on their side.

With the benefit of advice, investors are more likely to understand the value of topping up their Super throughout their working lives, and feel a greater sense of confidence and financial security around their Superannuation balance. They are also more likely to have a definitive retirement date and a strategy to achieve it.

However, many Australians remain unsure of the value of financial advice and the best way to access it. Overcoming this barrier is a key challenge in increasing Australians’ overall retirement readiness.


The Retirement Readiness GapOur research reveals a general lack of preparedness for retirement among Australians, with only 43.8% having set clear retirement goals and objectives. While investors are more likely to begin setting goals as they grow older and approach retirement, the most marked difference is between those who have received financial advice and those who haven’t. Over half (55.2%) of advised investors have clear retirement objectives,

Figure 26: Retirement Goals Do you have set goals/objectives set out for your Superannuation/retirement savings?

%

0

20

40

60

80

Tota

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Mal

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Fem

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43.848.8

37.8

53.1

35.2

10.5

51.2

74.6

61.255.2

28.824.4

45.4

58.865.3

Retir

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Gender RetirementStatus


Advised orUnadvised

Wealth Segments


Figure 27: Retirement Dates Do you have a definitive retirement date/age?

%

0

20

40

60

80

Tota

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Mal

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41.048.6

32.0

13.3

45.7

60.7 57.1

47.6

32.4 30.0

40.7

51.1 53.2

Fem

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Not

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Advi

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Core

Affl

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Gender Knowledge of Superannuation and Investments

Advised orUnadvised

Wealth Segments


Figure 25: Retirement Confidence LevelsRetirement Confidence Level

Unadvised Advised

Feel confident or very confident and they will meet retirement goals

25.7 48.4

Don’t feel confident or not at all and they will meet retirement goals

39.3 19.5


28


compared to only 28.8% of the unadvised. Similarly, close to half of advised investors have set a retirement date, compared to less than a third of their unadvised peers.

Four out of 10 Australians are not confident they will meet their target level of wealth for retirement, or that their Superannuation will be sufficient to fund their retirement.More alarmingly, 4 out of 10 Australians are not confident they will meet their target level of wealth for retirement, or that their Superannuation will be sufficient to fund their retirement. Figure 28 shows confidence levels among different investor groups as a weighted average score out of five. While investors scored an overall weighted average of around three out of five for being on track to meet their goals, individual confidence levels were often much lower. This result underlines the opportunity for product providers and financial advisers to engage investors and help them achieve a higher standard of retirement readiness.

Once again, investors who have received advice are substantially more confident of meeting their retirement income and lifestyles than those who are unadvised, as well as having a more positive outlook on the ability of their Super to last through their retirement. They are also significantly more likely to make extra Superannuation contributions in preparation for retirement, with 43.4% of advised retirees having made regular personal contributions, compared to only 30.4% of non-advised retirees.

Figure 28: A Significant Portion of Australians are Not Confident of Reaching Their Retirement Goals Confidence levels of reaching different outcomes

3.1691673.0 3.23.2

0

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2

3

4

5

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Core

affl

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HNW

Gender Retirement Status Knowledge of Superannuationand Investments

Advised orUnadvised

Wealth Segments

n A financial planner would be valuable in achieving retirement goals

n Superannuation savings will fund retirement income needs

n On track to meet retirement income and lifestyle goals

3.42.93.02.9

3.33.2

3.5

3.02.92.8

22.6

2.1

3.2 3.23.3

4.0

3.1

4.0 4.1

3.2

4.3

3.43.6 3.4

2.72.2

2.8 2.52.9

2.53.0

3.13.1

3.63.23.6

4.13.0

4.1

3.03.0


Figure 29: Building Confidence Through Advice How confident are you that a financial planner would be valuable in helping you to achieve your retirement goals?

Advised Unadvised

n Extremley confidentn Neutraln Not at all confident

n Confidentn Not confident

7.4%8.1%

23.7%

34.8%

26.1%

35.5%

19.4%

32.4%

10.9%1.7%



Demonstrating the Value of AdviceWhile investors who have sought advice are confident it will help them achieve their goals, others may not appreciate the benefits advice can offer. Two-thirds of advised investors are confident or extremely confident their financial planner will be valuable, compared to just 12.6% of investors who have yet to seek advice.

In fact, more than half of unadvised investors expressed a lack of confidence in the value of financial planning, demonstrating a clear need to create greater awareness in the community of the important role advice plays. This lack of understanding of the value of financial advice is in stark contrast to research findings showing the benefits of advice in preparing for retirement

Our research also reveals the wide variety of different approaches investors take in the way they use advice and interact with their advisers. Around one-third (32.3%) draw on their primary adviser as their exclusive source of advice, with younger and less knowledgeable investors most likely to rely on a single adviser.

However, other investors choose to either consult multiple advice specialists or to make their own decisions after consulting their advisers. As well as indicating the necessity of a flexible and scalable advice model, this finding illustrates the important role advisers play in building investor confidence and empowering informed decision-making.

Investors choose to either consult multiple advice specialists or to make their own decisions after consulting their advisers.

30


MEETING THE RETIREMENT CHALLENGEWith Australians living longer and enjoying more active retirement lifestyles, their financial needs and objectives are undergoing enormous change. While the financial services industry has responded with a growing range of retirement solutions, many investors remain profoundly uncertain about how to harness their Superannuation and non-Super investments to achieve a fulfilling retirement lifestyle.


As a result, a significant proportion of investors lack confidence about their financial security in retirement, expressing significant concerns about their ability to meet their financial goals and generate a sustainable retirement income. Underscoring this confusion is a lack of knowledge and widespread misunderstanding about the use or value of Superannuation and retirement products and advice.

However, our research also points to the solutions to this dilemma. It reveals that Australians who have received tailored financial advice become more confident investors and achieve better outcomes both before and during retirement. Not only do advised investors express a more positive and confident outlook, they are more likely to achieve their retirement goals and enjoy a higher standard of living after they leave the workforce.

The challenge is to clearly communicate the benefit advice can bring while meeting the needs of a highly diverse customer base. With many investors seeking advice and information from a variety of sources, while preferring to retain control of their overall financial direction, advisers are seeking to move beyond traditional holistic advice models and one-size-fits-all solutions.

SSGA is supporting this evolution with a range of retirement and investment solutions tailored for a variety of investor profiles, both before and during retirement. We look forward to working with you and your clients to help them achieve their retirement goals.


32

SSGA Retirement Lifestyle SolutionsIn the wake of the global financial crisis, a low interest rate environment and growing concerns around Superannuation have led many Australians to conclude that the traditional balanced fund approach to retirement investment may no longer be the best solution.

SSGA has designed three cost-effective products tailored for investors who have different risk profiles and asset allocation tolerances.

Each fund has a diverse portfolio with dynamic asset allocation and employ use of strategies which are designed to reduce downside equity risk.

SSGA Retirement Lifestyle Solutions at a GlanceFeatures SSgA Retirement Lifestyle Builder Fund SSgA Retirement Lifestyle Sustainer Fund SSgA Retirement Lifestyle Provider Fund

Performance Objective CPI +5% Income: RBA Cash +Growth: CPI +

RBA Cash + 2–3%

Risk Profile Medium Medium Low to Medium

Investment Horizon 5–7 years 5–7 years 5–7 years

Investment Approach Capital growth rather than an income return

Prepared to accept some volatility in investment returns

Some protection against equity market risk.

Combination of capital growth and income return Prepared to accept some volatility in investment returns


Income return over capital growthLimited tolerance for volatility in investment returns


Typical Investors Seeking to grow their portfolio and invest long term

Seeking to protect capital against inflation to generate a sustainable income in the future

Seeking to generate a sustainable income without capital growth


SPDR® Exchange Traded Funds by SSGAOffered by SSGA, SPDR exchange traded funds (ETFs) provide investors with the flexibility to select investments that are precisely aligned to their investment strategy. Suitable for retirees and pre-retirees seeking cost-effective diversification through a SMSF or outside Super, they may be particularly effective for investors looking to diversify offshore at a time when international markets are delivering attractive returns.

SSGA has a family of ETFs that offer domestic and international access in a low-cost, tradable and transparent vehicle

specifically designed for the needs of Australian investors, suitable for a variety of investor profiles. And now the SPDR S&P 500® ETF (SPY), the world’s largest and most actively traded ETF, is available in Australia. SPY tracks the S&P 500 Index, giving investors the opportunity to access the growth potential of the US’s top 500 companies — including Apple, Exxon, General Electric, Microsoft, Johnson & Johnson and more.

SPDR ETFs at a Glance

Features SPDR S&P® 500 ETF TrustSPDR S&P World ex-Australia Fund

SPDR S&P World ex-Australia (Hedged) Fund

SPDR S&P Global Dividend Fund

SPDR Dow® Jones Global Real Estate Fund

ASX code SPY WXOZ WXHG WDIV DJRE

Index S&P 500 S&P Developed ex-Australia LargeMidCap AUD Index

S&P Developed ex-Australia LargeMidCap AUD Hedged Index

S&P Global Dividend Aristocrats Index

Dow Jones Global Select Real Estate Securities Index

Access the Growth Potential of

The top 500 US blue chip companies

Shares across the world’s developed economies

Shares across the world’s developed economies, with currency protection

Shares in the highest dividend yielding companies in the Index

Listed global real estate investments

For further information on all available SPDR ETFs, please visit spdrs.com.au.

34


APPENDICESThe Retirement Market in AustraliaThe number of Australian retirement accounts is expected to keep growing, and could double of the coming decade as the baby boomers continue to move into the retirement years.

Rice Warner projections indicate that as the Superannuation system matures, about 95% of all retirement payments will be taken as income streams by 2025.

The total Australian retirement market as at 30 June 2014 sat at of $581.4 billion. This only represents 31.6% of the total Superannuation market.

Rice Warner projects retirement assets to increase to $1,429 billion (in 2014 dollars) at 30 June 2029. This is equivalent to an increase to 38.1% of all Superannuation fund assets held by retirees at 30 June 2029.

Figure 30: Retirement Projections Results (2014 Dollars)

Market Segment

Today In 5 years In 15 years

30 June 2014 30 June 2019 30 June 2029 CAGR^

($M) (%) ($M) (%) ($M) (%) (% p.a.)

Not-for-Profit Funds

Corporate Funds 6,119 1.1 6,447 0.8 0 0.0 -100.0

Industry Funds 14,268 2.5 80,991 10.5 271,201 19.2 21.7

Public Sector Funds 65,890 11.3 90,774 11.8 141,530 10.0 5.2

Subtotal 86,277 14.8 178,211 23.2 412,731 29.3 11.0

Commercial Retirement Products

Commercial Retirement Products 178,253 30.7 209,502 27.3 375,981 26.6 5.1

Subtotal 178,253 30.7 209,502 27.3 375,981 26.6 5.1

Self-Managed Super Funds

Self-Managed Super Funds 316,870 54.5 380,046 49.5 622,222 44.1 4.6

Subtotal 316,870 54.5 380,046 49.5 622,222 44.1 4.6

Total retirement market 581,400 767,759 1,410,935 6.1

Retirement assets as percentage of all Superannuation assets

31.6 32.2 38.1



Figure 31: Ten Year Projection of Retirement Rollovers and Benefit Payments — Estimated Asset Split as at 30 June 2025

Pension Rollover Components

Market SegmentTotal Lump

Sums (%)Total Pension Rollovers (%) Pension Within Fund (%)

Rollover to Commercial Product (%)

Rollover to Commercial Product (%) SMSF Establishment (%)

Corporate Funds 7.5 92.5 43.0 23.5 23.5 2.5

Industry Funds 7.5 92.5 50.6 37.0 2.4 2.5

Public Sector Funds 7.5 92.5 75.0 7.5 7.5 2.5

Self-Managed Super Funds 2.0 98.0 96.0 1.0 1.0 0.0

Retail Funds 7.5 92.5 60.0 8.0 22.0 2.5

Eligible Rollover Funds 100.0 0.0 0.0 0.0 0.0 0.0

Total 4.5 95.5 79.6 10.3 4.4 1.1


About the ResearchThis paper is based on the findings of research commissioned by SSGA and produced by leading independent consultant, Rice Warner. The research is an extension of SSGA’s annual Global Monitor Report.

The research used to produce this white paper is underpinned by quantitative research, conducted by Rice Warner, including:

Online surveyA 15 minute online survey was conducted between 29 April 2015 and 5 May 2015. A total of 1,200 APRA-regulated Super

fund members and SMSF investors took part. Respondents ranged between the ages of 22–90. Of these, 200 were Superannuants aged 22–44.

Rice Warner benchmarking studies Data from Rice Warner’s annual 2015 Superannuation Market Projections Report and 2014 Super Insights benchmarking research have also been used in this white paper.

© 2015 State Street Corporation. All Rights Reserved.ID4791-AUSMKT-1985 0815 Exp. Date: 31/07/2016

ssga.com

State Street Global Advisors Australia Services Limited Level 17, 420 George Street, Sydney, NSW 2000 1300 665 385.

Issued by State Street Global Advisors, Australia, Limited (ABN 42 003 914 225) (“SSGA Australia”) the holder of an Australian Financial Services Licence (AFSL Number 238276). SSGA Australia’s Responsible Entity, State Street Global Advisors, Australia Services Limited (ABN 16 108 671 441) (“SSGA, ASL”) holds an Australian Financial Services Licence (AFSL Number 274900) pursuant to Section 913B of the Corporations Act 2001. Registered office: Level 17, 420 George Street, Sydney, NSW 2000, Australia · Telephone: +612 9240-7600 · Facsimile: +612 9240-7611 · Web: www.ssga.com.

References to the SSGA Retirement Lifestyle Builder Fund, SSgA Retirement Lifestyle Sustainer Fund and SSgA Retirement Lifestyle Provider Fund (“the Funds”) in this document are references to the managed investment schemes domiciled in Australia, promoted by SSGA Australia, in respect of which SSGA, ASL is the Responsible Entity. This document should be read in conjunction with the latest Product Disclosure Statement available on our website which contains more information regarding the charges, expenses and risks involved when investing in the Funds.

SSGA ASL is the issuer of units in the SPDR funds and the Responsible Entity for the managed investment scheme Australian SPDR funds quoted on the ASX or AQUA Product Issuer for those Australian SPDR funds quoted on the AQUA market of the ASX.State Street Bank and Trust Company (ABN 70 062 819 630) (AFSL number 239679) is the trustee of, and the issuer of interests in, the SPDR® S&P 500® ETF Trust, an ETF registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 and principally listed and traded on NYSE Arca, Inc. under the symbol “SPY”. SSGA ASL is the AQUA Product Issuer for the CHESS Depositary Interests (or “CDIs”) which have been created over units in SPY and are quoted on the AQUA market of the ASX. The rights of CDI investors are different to those of investors in an Australian registered managed investment scheme and investors should read the applicable PDS before investing to understand the additional risk factors associated with investing in CDIs. Investors should read and consider the Product Disclosure Statement (PDS) for the relevant SPDR® ETF carefully before making an investment decision. A copy of the PDS is available at www.spdrs.com.au.

ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETF’s net asset value. ETFs typically invest by sampling an index, holding a range of securities that, in the aggregate, approximates the full Index in terms of key risk factors and other characteristics. This may cause the fund to experience tracking errors relative to performance of the index.

SPDR and Standard & Poor’s® S&P® Indices are trademarks of Standard & Poor’s Financial Services LLC and have been licensed for use by State Street Corporation. The Dow Jones Global Select Real Estate Securities Index is a product of S&P Dow Jones Indices LLC or its affiliates and has been licensed for use by SSGA. SPDR products are not sponsored, endorsed, sold or promoted by any of these entities and none of these entities bear any liability with respect to the ETFs or make any representation, warranty or condition regarding the advisability of buying, selling or holding units in SPDR products.

Investing involves risk including the risk of loss of principal. Risk associated with equity investing include stock values which may fluctuate in response to the activities of individual companies and general market and economic conditions. Asset Allocation is a method of diversification which positions assets among major investment categories. Asset Allocation may be used in an effort to manage risk and enhance returns. It does not, however, guarantee a profit or protect against loss.

The information contained in this document is for information purposes only and does not constitute personal advice. SSGA Australia and SSGA, ASL, its employees, directors and officers accept no liability for this information or any consequences from its use. No person or entity should act on the basis of any information contained in this document without taking appropriate professional advice. Nothing contained in this document constitutes an offer of, or an invitation to purchase or subscribe for interests in SSGA Australia Funds.

This communication is directed at institutional and wholesale clients only. The products and services to which this communication relates are only available to such persons and persons of any other description (including retail clients) are not entitled to rely on this communication. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA Australia’s express written consent.

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