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‘Simple advice’ may actually erode super balances if members don’t understand the limitations of the information they’re receiving, according to research by Guardian Financial Planning.
The dealer group’s research looked at a number of scenarios where people could actually be worse off financially if they seek ‘simple advice’ from their superannuation fund.
Guardian executive manager Steve Browning said the research revealed that “pushing the concept of ‘simple advice’ could be costly” for investors — a prime example being investors with multiple super accounts.
“One case study revealed a member stands to lose not only their life insurance cover but up to $190,000 in super due to the narrow information provided by a single super trustee.”
In addition, Browning said it is widely accepted that consolidating multiple accounts may save investors a large sum of money by the time they reach retirement age.
“Yet an investor seeking ‘simple advice’ from their super fund will receive advice on that fund only, a situation that could mean they make a decision that leaves them far worse off in the long run.”
He appealed to the Federal Government to “ensure consumers are fully aware at all times that what they are receiving from superannuation trustees is ‘informed guidance’”.
“We’re calling on the Government to steer clear of using the term ‘advice’ in relation to the interaction between super trustees and members and refer to it as ‘informed guidance’.
“Otherwise we risk confusing Australians into thinking they have received comprehensive financial advice, with potentially disastrous results.”
