Vanguard Super is keen to play a larger role in closing Australia’s advice gap, but will stick to “small a” advice rather than trying to roll out its powerful robo-advice tools in the antipodes.
“We absolutely will, if the regulation changes, partake in nudges, personalised guidance tools and calculators for our members – not just for our [super] members but outside of super as well,” Vanguard Australia managing director Daniel Shrimski told the Professional Planner Shape of Advice podcast, referring to the next phase of the Delivering Better Financial Outcomes reforms.
“What we were excited about when we were building Vanguard Super was that we could support Australians across whole of wealth, inside super and outside super. We will absolutely do more in ‘small a’ advice in terms of guidance.”
But “technology-enabled advice” is not on the horizon for Vanguard Super, though its global business operates popular robo-advice tools and Shrimski thinks there’s a role for it in Australia’s advice ecosystem.
“We will not be leading that charge – we have no plans,” Shrimski said.
“And then of course, 90 per cent of our business from a revenue perspective and an asset perspective is working with full service financial advisers, right? And I don’t see that changing. That is the core of our business, and we want to do more to support them.”
Shrimski also said that rolling it out in Australia could distract Vanguard from scaling up the superannuation business it rolled out in late 2022 and which now has circa $4 billion in assets under management.
“We’re trying to scale a superannuation fund… and our 100 per cent focus is on trying to grow a superannuation fund, and we have a long way to go. Our focus is solely on that, and obviously trying to continue serving financial advisers that are critical to our business. So we have a full plate of activity focused around those areas.”
But it could go some way to helping close the advice gap in Australia, where only 10 per cent of Australians are advised compared to 60 per cent in the US.
“Obviously, I think we’d all agree Australians will achieve better financial outcomes with advice,” Shrimski said.
“The data is clear on that. Our position is that we feel that when you think about advice, it should be the whole spectrum of advice that is in consideration here, all the way from education to nudges to personalised guidance to technology-enabled advice, and obviously full-service financial advice.
“And I want to be clear, when we think about technology-enabled advice, we see that as a very, very different market to full service financial advice. In the US, technology enabled advice, the average balance that’s being advised on is like $20,000 to 30,000; but it enables more Australians to get guidance on what might be just simple asset allocation.”
According to Vanguard research, Australians hold more cash relative to other jurisdictions; 23 per cent of financial assets outside of property are held in cash.
“And when you think about the Australian equities market, nine per cent [per annum] over the last decade, US equity market, 15 per cent [per annum] over the last decade. You could say that Australians have missed out a little bit by holding cash.”
