Super fund members are reluctant to take up financial advice due to lack of knowledge in what the offering entails and the cost involved, according to research by Professional Associations Super (PAS).
Around 67 per cent of respondents did not seek advice within super, saying they did not understand the types of advice on offer and what value it delivers.
PAS chief executive officer Megan Bolton said funds needed to find a way to effectively communicate the value and types of advice offerings to members.
“Low awareness and understanding of advice means the easiest option is to do nothing at all,” Bolton said. “That’s how we’ve come to a situation where 30 per cent of people aged over 50 have not made any preparations for retirement – based on the 2010 Mercer Superannuation Sentiment Index.”
The survey revealed that 57 per cent of respondents also cited low levels of trust as a barrier to using a financial adviser, following negative returns and poor publicity during the global financial crisis.
“Super funds keen to expand their advice offering need to overcome the perception that financial advice doesn’t deliver value, and rebuild trust in those providing it, if they want to reach more members,” Bolton said.
The survey revealed there is a demand for financial advice among super members, as long as they understand the value proposition. Bolton said the main challenge for super funds was communicating the availability of the service in a simple and direct manner.
