What happens when it all goes wrong? A study into the impacts of personal financial shocks
Creators: name: Bruhn, Aaron Grant
Publisher: name: The Australian National University
Year: 2013
Subjects: subject: Life change events Economic aspects
subject: Finance, Personal
subject: Financial crises
subject: Well-being Economic aspects
subject: Retirement Planning

description: This thesis examines the impact on individuals who suffer from significant financial loss. It also highlights broader environmental issues relating to financial provision for individuals, particularly in retirement. Such issues include regulation, financial literacy, the significant choice available, and the need for professional financial advice. These are particularly significant in the Australian context where financial self-sufficiency is promoted as a desired option in retirement. The collapse of Queensland-based Storm Financial is used as a casestudy to investigate these matters. A qualitative approach was taken with elements of grounded theory and narrative inquiry utilised when engaging with the available data. Available data from a 2009 Parliamentary Inquiry includes 823 pages of public hearing transcripts and 2879 pages of written submissions. Interviews with 15 different parties were also carried out, giving rise to 33 hours of recorded conversation. To mitigate issues of researcher and participant bias and a reliance on qualitative interpretation as the primary tool of analysis, various procedures including triangulation and member checking were adopted. It is apparent that sudden and significant financial loss is devastating. An individual's emotional wellbeing is a primary casualty, and one's mental health is also vulnerable. An individual's social world is also impacted, including relationships with family and friends, how one engages in community activities, and the ability to partake in familial and cultural roles. Financial victims also perceive a sense of judgement from society at large about their losses. A loss of trust may be the epitome of financial loss. Any financial promise requires trust in institutions, professional service providers, government via licensing and regulation, and others including oneself. Trust in all of these entities is impacted when loss occurs, and is highly dependent on not just the size but also the circumstances of those losses. The loss of trust and the loss of financial means leads in turn to a lack of control over one's life. Many of these impacts are reflected in other traumatic circumstances, and some are seen to be particularly exacerbated in the specific case of Storm. These impacts demonstrate that vulnerability exists when encouraging self-sufficiency in retirement. Greater individualisation in financial provision introduces risks that current regulation may not be equipped to mitigate, particularly in the areas of licensing and disclosure. Information asymmetry between informed and non-informed participants exacerbates these risks. This highlights the importance of ethical disposition when dealing with financial affairs. The current retirement 'pillars' of the age pension, superannuation and other savings describe 'mechanisms' of income, but an alternative pillared system of government, other institutions, and oneself is offered to highlight the underlying sources of trust. Storm's collapse highlights that money matters but not for its own sake - it is the subsequent loss of control and options that is tangibly impacted. Significant financial loss is therefore anything but trivial, and a strong dependence of overall wellbeing on financial wellbeing is highlighted. Any system which allows unnecessary risks upon the attainment of such financial wellbeing for individuals should therefore be subjected to critical scrutiny.