Irene Guiamatsia

Around two-thirds of non-retirees don’t feel prepared for retirement and almost half are reluctant to use their super fund’s pension product, according to findings from Investment Trends.

The findings come amid super trustees obligations to offer a retirement strategy under the Retirement Income Covenant, which the government and regulators recently lambasted industry lethargy towards providing adequate solutions.

Speaking on a webinar on Wednesday, Investment Trends head of research Irene Guiamatsia said 37 per cent of non-retirees felt prepared for retirement while two-thirds are unprepared.

“This is a 10-year low,” Guiamatsia said.

Additionally, the research found that 45 per cent of non-retirees are reluctant to use their super fund’s pension products, and specifically said they believe these products do not meet their retirement needs.

“What we’re seeing here is a significant proportion of members lack confidence when it comes to retirement, and some of them are certain that super funds cannot meet their retirement needs,” Guiamatsia said.

Despite the plans for the Albanese government to use the Quality of Advice Review as a vehicle for super funds to give more financial advice, the Investment Trends research found only 1 per cent of members are utilising the intra-fund advice offering available from their super fund.

“This is perhaps slightly alarming that the average age of those advised members is 52 years old where one could argue it’s a bit too late depending on the individual circumstances,” she said.

Despite the low take-up, the research also found members were willing to take more advice from their super funds.

“Close to 30 per cent expressed a preference for an adviser from their super fund that they already have a trusted relationship with,” she said.

“The data is abundantly supportive here of the verticals [vertical integration] that we’ve heard of late from the minister, calling for super funds to deliver advice.”

The research found the average cost to provide intra-fund advice was $9 per member subsidized across the whole membership base but is actually $762 per member who accessed advice.

For intra-fund and comprehensive advice, those figures were $17 and $707, respectively.

Guiamatsia said there is still the necessity for a holistic strategy that extends beyond merely focusing on advisory aspects or product features in isolation, however.

“The notion of a one-size-fits-all approach is swiftly dismissed by industry experts, recognising the intricate nature of the problem at hand,” Guiamatsia said.

She emphasised that a nuanced approach that carefully meets the specific needs of different member groups is paramount as the global landscape shifts and challenges persist.

Unmet needs

While the research found there are 12 million Australians with unmet advice needs, Guiamatsia pointed to the “much less quoted number” of roughly 490,000 who are already advised but still have an advice gap.

“What that shows is financial advice is not the panacea and ongoing work is actually required to ensure the advice provided is and remains fit for purpose,” she said.

Guiamatsia identified three key insights that shed light on the changing dynamics of retirement planning and financial preparedness.

The first was the Investment Trends retirement adequacy gap has doubled in the past five years.

“This is a metric that we’ve been measuring for the eight out of 13 years of our retirement income report, and [we recently found] that over one in five retirees are concerned about outliving their retirement savings.”

The second insight is that retirement is the number one unmet advice needs.

“It is natural that retirement and superannuation and financial advice would be intricately connected,” Guiamatsia said.

“Half of the 12 million Australians who express some form of unmet advice needs are open to professional financial advice and indistinctly preferred that advice would be coming from them in super fund.”

The third key insight is that super fund members are open to discussing retirement from a young age [18 to 25], not just when they transition to retirement.

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