Will super funds plug the advice gap?

Since Financial Services Minister Stephen Jones chose to announce the government’s response to the QAR final report in front of a small audience of superannuation fund CEOs and senior industry executives hosted by ASFA, much of the focus has been on this aspect of the reforms.

The goal of bringing superannuation funds back into the fold of providing advice has been to improve access to consumers and plug an advice gap.

According to a report released in May, there is substantial demand from working Australians for more financial support from their super funds.

The research found 86 per cent of Australians want personal financial advice, and a further 90 per cent want super funds to provide advice on factors that affect their financial future, such as mortgage payments and overall cash flow.

Speaking on the ifa podcast, chief executive of moneyGPS and accountantsGPS, George Haramis, said the first thing super funds need to do is decide what kind of service they want to provide.

“As a starting point, there’s two types of clients that they need to cater for. Well, actually three. There’s the general member who’s accumulating their wealth, there’s the pre-retiree and there’s the person getting retirement income,” Mr Haramis said.

“Now, digital can cater for most of those situations, certainly the accumulation and building of wealth, pre-retirement. Retirement income, we’re just about there with retirement income and you’ve always got your traditional advice services to cater for complex situations. They’ve got choice where they can put together a package and really deliver a first-class solution.

“I know there are consulting groups that can help them do that, as well as the associations and we’re quite, you know, I’m sure the associations would be more than pleased to engage with super funds and institutions to help them do that. I’d like to see them do that. I think everybody would like to see them do that. And there’s nothing wrong with competition.”

Super funds don’t have to tackle the more complex advice needs themselves, he said, but there are options for super funds to deliver a “fairly comprehensive service”.

“If you’re not in a position to have your own internal advisory or comprehensive advice business, traditional business, then the option is to refer that out or to have a relationship with a national group that can cater for your needs,” Mr Haramis said.

He added: “There’s 12–13 million working Australians who would dearly love advice on a given day, right? And I’ve seen what happens when people make decisions when they don’t get advice, when they don’t seek advice, where they think they can afford advice, and it’s not pretty. Particularly if they cancel things like insurance and then become ill, which I’ve seen personally.”

To hear more from Mr Haramis, click here.