Super funds have a hard-won race ahead of them to win the hearts and minds of members as they step further into the world of dishing out financial advice to members.
The Quality of Advice Review sought to address the accessibility and affordability of advice, while Minister of Financial Services Stephen Jones wants to reduce the cost of advice as he gives new liberties to super funds to dish out advice.
Recent advice by digital advice provider, Otivo, found that while 84 per cent of Australians trust their super fund, only one third have researched the advice their super fund can offer them.
Meanwhile, research from Aware Super on 100,000 of their own members found that those who received advice had an average of $150,000 more in super at retirement and reported two and a half times more voluntary tax-efficient super contributions than non-advised members.
But while the QAR reforms present a massive opportunity for funds to up their services, it’s well-known that not at all funds are confident in taking on the responsibility, instead preferring to focus on investment.
Funds have grappled with fulfilling obligations under the Retirement Income Covenant to develop a retirement income solution to members, as well as maintaining a competent level of member services.
The pecking order
The path funds take to implementing financial advice will be another important differentiator between funds for members, though most funds are elbow-deep in a digital transformation that includes tools that help members answer their online questions via the fund’s website.
This digital-first strategy as a means of reaching more of their members in an affordable way follows years of rapid industry growth and consolidation as large super funds realise they can’t get by with a handful of their own in-house advisers.
UniSuper has revealed it wants to become a home for advice professionals as it sets out to grow its financial advice footprint. While it already has a sizeable adviser workforce of about 160 full-time equivalents able to offer varying levels of financial advice to its members.
Cbus, meanwhile, says it will focus on members with lower balances and those forced into early retirement due to injury who cannot afford to pay for comprehensive financial advice.
“Our members typically have relatively straight-forward needs, and would benefit from simple answers to simple questions, however, there continues to be a gap between what super funds can help them with, and comprehensive financial advice,” Cbus head of advice, Lynda Cross says.
Advice for all
Rest established an internal team of financial advisers in 2017, with digital tools for members launched around that time, too.
With nearly two million members, Rest CEO Vicki Doyle says members often have less complex advice needs, and would have no way to access simple advice if it wasn’t available through superannuation funds.
Super funds also have an important role to ensure that Australians on lower and middle incomes are still able to access financial advice, she says.
“Rest has seen a sustained increase in demand for simple advice from our young members – particularly young women – during the past five years, which we’ve been able to meet with our digital tools,” Doyle says.
“All Australians should be able to access financial advice, regardless of their wealth or circumstances.”
HESTA, which has more than a million members, offers access to financial advisers, super education in the workplace, information sessions and seminars, online services and member help. A digital tool called Future Planner has also been accessed by more than 170,000 members.
A spokesperson says that while the fund is pleased with the initial steps taken in the draft legislation for the delivering better financial outcomes package of reforms and the removal of red tape and clarification of legal uncertainties.
“One example is the potential improvement in assisting members at scale by reducing the disclosure burden,” the spokesperson says.
“This would be especially relevant when delivering limited personal advice through digital channels.”
A clearer path needed
However, Cross at Cbus doesn’t believe that enough consideration has been given to the parameters, making it difficult for funds to provide cost-effective advice to couples, despite the fact that the social security system is based on a couple’s income and assets.
“As an example, if one member of a couple is a Cbus member, and the other is a member of another fund, they could receive two different sets of advice that don’t necessarily provide an optimal outcome for them as a couple,” she says.
The alternative for them is to seek comprehensive advice that is often out of their reach, she adds.
“We need to make it easier for our members and their families to access the limited advice they need, at a price that is affordable, and not just at the end of their careers,” Cross says.
“They should be able to access these resources, so they can effectively manage their retirement.”
