While the superannuation industry continues to debate how best to communicate with members and develop innovative retirement solutions, the value of financial advice to this audience has never been greater.
Super fund members are fertile ground for advisers of all persuasions with researcher CoreData’s latest annual Post-Retirement Report finding that only one in 10 super fund members use their super funds’ financial planners as a primary source of advice.
If this suggests that super funds have not been very successful in engaging or communicating their value proposition, then it is non-aligned financial advisers who have benefitted most with 33.4 per cent of 728 respondents – all super fund members – polled, citing them as their main provider of financial advice.
Aligned advisers (24.9 per cent), accountants (12.5 per cent) and the super funds’ financial planner (9.9 per cent) were next in line.
Salvador Saiz, head of advice, wealth and super at CoreData, said he was surprised the figure for super funds’ advisers was so low “given the work they have put into their advice piece” but added that the research house had no previous data on this segment to compare it with.
Financial advice was identified by 58.4 per cent of respondents as one of the most valuable services their funds could offer, with 57.1 per cent also identifying financial counseling.
General expectations
More generally, the CoreData research examined super fund members’ attitudes, intentions and awareness of funds’ retirement services offerings.
With the impact that the global financial crisis had on retirement savings and need to work for longer in order to ensure an adequate retirement, more than four in five (83.5 per cent) respondents plan to keep working after they retire.
Of this number, 47.8 per cent plans to work part time, while 35.7 per cent plan to work on a casual basis.
The average weekly income respondents expect to need in retirement is $1,025.92, up 6.8 per cent from $961.01 in 2012.
When asked which super funds (at a sector level) are providing the best overall retirement solutions, many respondents were unsure, with two in five (38 per cent) pre-retirees saying they were not sure, and 29.7 per cent of post-retirees saying the same.
However, self-managed super funds (SMSFs) proved the most popular option with post-retirees, with more than one in four (27.1 per cent) nominating them as offering the best retirement solution, well ahead of the 19 per cent that nominated industry funds and public sector funds (19.3 per cent).
Retail (4 per cent) and corporate funds lagged substantially in comparison (1.8 per cent), both from the perspective of pre-and post-retirees.
Source: CoreData
“While the industry continues to debate the need for a different approach to asset allocation and product solutions for retirees – and some super funds have certainly been innovative in this regard – it is interesting to see that more than three quarters of respondents are more likely to want their main super fund to focus on investment options that focus on sustainable income, capital preservation and low volatility, while 78.9 per cent expect their super fund to tailor its investment options in retirement,” said Saiz.
Overall the most popular products respondents would like their funds to offer in retirement are investment options focused on sustainable income (45.7 per cent) and capital protection (45.3 per cent).
“What is surprising is that offering direct investment options such as term deposits and direct equities was one of the least popular ways cited for funds to retain members’ business,” said Saiz.
“This finding is interesting given the increasing number of super funds launching direct investment options in order to offer members greater control and stem the outflow to SMSFs.”
