There are clear opportunities to disrupt intra-fund and general advice that the industry is overlooking, shunning everyday Australians that need it most, according to superannuation experts.
As the number of financial advisers continue to dwindle and many opt to serve a specific demographic that is educated and wealthy, an emerging field of unadvised clients falls by the wayside. Many in the latter surfaced at the thick of the coronavirus pandemic.
General manager of Link Advice at Link Group Duncan McPherson saw a spike in the number of super fund members seeking help around budgeting, cash-flow planning and bill prioritisation during COVID-19. Applying for government incentives like the early release of super was also a burning question.
McPherson told the recent Association of Superannuation Funds of Australia (ASFA) conference that it is worrying how the industry excludes this cohort from the type of advice that could potentially make a positive and significant impact in their lives.
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"They have lower financial literacy, [have] less savings and interest, and less likely to be supporting themselves in retirement. They are also less likely to pay for any sort of advice [and are] on lower income," he said.
One report ASIC released not long ago delved into the demographics of financial advice clients and who tended to actively seek this service. University graduates; potential new homeowners; and those earning $100,000 per year and above were common denominators.
Perhaps the best example where advice needs a rethink, McPherson said, is for members who have retired, taken their money out of super and "wake up in a panic" one day realising they are running out of money and have not applied for the Age Pension.
"[This] is an awful situation and should not be happening anywhere let alone a country like Australia," he said.
The industry must make it easy for these members to access advice around complex topics such as income streams and the Age Pension, which at times is attached with a "pride issue" that deters them from applying for it.
"We owe them that right and have to think about how we can do that," McPherson said.
Aware group executive of advice Sarah Forman, who sat on the same ASFA panel discussing how financial advice can be improved, agreed that advice needs a rethink, particularly as the number of advisers contract, and many target servicing the high-net-worths and affluent to make their businesses viable.
A large cohort of Aware members comprise teachers, nurses and doctors, and emergency workers, who are the everyday Australians.
"We see intra-fund advice as the accessible way for members to have some level of personalised advice that is affordable to them," Forman said.
"For a fund like ours, we are passionate about finding ways to meet the needs of the average Australian."
Less than 10% of members engage with their superannuation account - if at all, according to InPayTech chief innovation officer Brad Riley, pointing to the payment services firm's analytics.
Riley told Financial Standard that the industry tends to overlook seasonal events or milestones in members' lives such as transitioning jobs, starting a family and buying a new house, that could be enriched from advice.
Using its employee and super fund member engagement platform ClickVu, which houses data such as payroll and super contributions, the firm can tap into these trends by aiming to move to a user-consent model.
Taking the trends spotted in investment portfolios and other lifestyle-type decisions made for example, InPayTech can help by supplementing the intra-fund advice model with more specific, timely and relevant information that help make better decisions, he said.
ASIC wants to tackle the major barriers to limited advice, launching an industry consultation under CP332 Promoting access to affordable advice for consumers, with many stakeholders pushing for expanding the constraints of scaled advice.
Forman said there is currently a lack of clarity around this "collectively charged model", seeing many licensees erring on the side of caution in terms of assisting members with areas like Centrelink entitlements and household income retirement planning.
It comes down to an on-boarding experience, she said.
"How do you really make sure that any on-boarding experience for any financial product or fund helps you understand where go to for any information?"