The majority of superannuation fund members are not willing to pay more than $500, even for a comprehensive financial plan, and no fund has been able to marry the needs of members approaching retirement cost-effectively, Rice Warner believes.
In an analysis, Rice Warner’s head of fintech and market insights, Nathan Bonarius, said the demand for advice would increase substantially, to the point where one-in-seven employed people were likely to require regulated financial advice each year.
However, consumers did not want to pay a high price for advice. While funds had developed instar-fund advice models they did not cater for members approaching retirement where their circumstances were more complex.
“Technology offers one avenue for satiating the tidal wave of incoming demand. The Australian Securities and Investments Commission (ASIC) research showed that, although take up of digital advice is still low, 37 per cent of those who didn’t go ahead with their plan to receive advice, would consider digital channels instead,” Bonarius said.
“Not only can digital tools provide an alternative for members seeking advice at scale, but they can also increase engagement.”
Bonarius noted that a third of funds did not have a superannuation projection calculator on their website and of the funds that did one-fifth redirected members to ASIC’s MoneySmart calculator.
He said the use of technology and data analytics had paved the way for:
- Increased provision of targeted, goals-based advice which allows tailored advice for clients;
- Increased ability to access clients in remote locations;
- Sophisticated advice and tailored advice strategies (using online tools accessing mathematical engines and algorithms);
- Scalable advice models which reduce the marginal cost of providing financial advice; and
- Pre-population of data using arising technologies such as Open Banking APIs.
He said the super funds would fail members in their duty to support members in achieving the best retirement outcomes unless they were able to provide members with advice delivered at scale.
“With potential upcoming changes to default models and stapling of superannuation accounts funds will need to get both advice models and digital engagement right to retain members through retirement,” he said.
“Both as an opportunity to grow the fund through better retention, but also as a hedge to further disruption in the default space.”