Super funds consider advice options

The expansion of scaled advice is not necessarily a threat to the broad-based financial advice offered by financial planners, according to Jo-Anne Bloch, partner and financial advice leader at Mercer.

Bloch, a former chief executive of the Financial Planning Association of Australia, says trustees of superannuation funds are increasingly exploring ways of offering financial advice to members as part of their service.

However she believes the expansion of scaled advice may well lead to a greater demand for financial advice in all its forms.

A recent discussion paper released by Mercer concluded that superannuation funds “can easily and cost-effectively provide simple advice that will suit the majority of members”.

While super funds are considering a variety of models for offering scaled or comprehensive financial advice, Bloch estimates that basic financial advice should meet the needs of up to 80 per cent of members.

According to the Mercer report, superannuation funds have made substantial progress in providing information to members over the past few years.

“Developments such as short-form product disclosure statements and online self-service portals are directed at satisfying members’ hunger for information about their super,” it stated before warning that Australians still have considerable knowledge gaps about important superannuation issues.

According to the 2011 Mercer Superannuation Sentiment Index, a national survey of 1028 full-time working Australians aged between 25 and 65, 21 per cent of respondents did not know which option their super was invested in.

In addition, 20 per cent did not understand the tax benefits of super.

More than half (54 per cent) said they wanted to have a strong or sophisticated knowledge of superannuation, while only 14 per cent said they already had.

The most popular source of advice among survey respondents was a financial adviser (42 per cent) followed closely by their superannuation fund (40 per cent).

The Australian Securities and Investments Commission’s Consultation Paper 164, Additional guidance on how to scale advice, was released in July 2011 and Government is yet to release details of how super funds will be able to deliver advice.