The Productivity Commission has been told that access to financial advice can make a significant difference to the financial outcomes of superannuation fund members.
The Association of Superannuation Funds of Australia (ASFA) has used a supplementary submission to the Productivity Commission inquiry into Superannuation Fund Efficiency and Competitiveness to point to the provision of advice as being a key benefit over and above the delivery of positive investment returns.
However, the ASFA submission argues strongly in favour of the provision of intra-fund and scaled advice as being most likely to meet the needs of most members and points to the growing attractiveness of robo-advice.
“ASFA research suggests that the majority of funds provide advice to members; most funds offer personal advice that is scaled; and the majority of scaled personal advice is provided as intra-fund advice,” it said.
The submission claimed the costs of intra-fund advice were very low — “generally equivalent to around two basis points of assets”, and cited Deloitte research, which had found the estimated cost of providing intra-fund advice ranged from $8 per member per annum (for funds with more than 800,000 members) to $18 per member per annum (for funds with less than 4,000 members).
“In our view this does not impose an excessive cost burden on funds or represent an unreasonable cross-subsidisation between members,” it said.
Dealing with the provision of comprehensive advice, the submission acknowledged that it could “greatly assist consumers to make appropriate decisions, in particular with respect to retirement income stream products”.
“The increasing number of fund members approaching retirement age, with growing levels of assets and improvements in life expectancy, means access to superannuation advice is ever more important,” it said.
“In contrast with intra-fund advice, members who receive comprehensive advice are charged a fee which, in some circumstances, can be deducted from their account.”
