The financial planning industry can help address the proposed opt-in requirements by making advice more about retirement income, according to the director of Provisio, Cameron O’Sullivan.
O’Sullivan believes both the planning and super fund industries need to move beyond the existing 12-month investment performance approach to talk more about retirement incomes adequacy.
Most review processes were just about 12-month performance reviews, which didn’t tell investors anything useful, and 12-month super fund statements were the same, O’Sullivan said.
“What we really need to be positioning that towards is retirement income. I don’t even mean capital projections. Telling someone that if they keep doing what they’re doing they’re going to have $300,000 in their super fund doesn’t mean a lot for their member. But if you can say to them that ‘under the current rules, you’re looking at a retirement income of $30,000 a year including Centrelink, that’s a much more meaningful figure.
“If you start engaging people on that aspect, it will be the solution to advisers in the opt-in world, because people will want to talk about their retirement plan, and the super funds will drive engagement by it because more members will be looking at their website and their member statements because it will be giving them the information they actually want,” he said.
The advice industry has been “very ordinary” about making advice more about retirement income, O’Sullivan said.
The advice industry could also have communicated the impact of the financial crisis much more clearly to their clients if they told them their yearly retirement income had fallen by $6000, rather than simply informing them that their total super fund balances had fallen by 25 per cent, O’Sullivan said.
