The financial wellbeing of Australians is in the hands of super funds

In the next 12–18 months, many economists foreshadow a financial tsunami of distress to hit our shores, caused by soaring cost of living, interest rate hikes, rising rents, increased mortgage payments, rising energy and food prices, and lower disposable income. It’s quite a cocktail and with inflation set to be with us for years, we are set for distressing times for everyday Australians – so now is the time for action to make financial guidance and support accessible. This is a moral leadership issue, not a technology or government lobbying issue. No one is to blame yet everyone should be accountable for progress.

Looking ahead, one worst case scenario is that Australians are likely to turn to their savings or worse, simply rely on credit to survive their rising costs. If the latter starts, we have a massive social issue arising through increased credit card debt (at horrendously high rates) and yet no safe landing for millions when the credit limit is reached. No education, no guidance, no financial literacy, no help but lots of financial distress.

As the pressure mounts, we should be thinking about how to provide guidelines on consolidating debt, using super the right way and assisting with cash flow budgeting – yet the parties that own this space, the Super Funds, the financial advice market, and the banks, are in a state of paralysis fearing regulatory punishment for incorrect engagement in personal/general advice. Against this trend, it is clear we need brave corporate and moral leadership to “unite”, to carry some risk and to start providing accessible solutions through low-cost digitalisation to their members, their clients, and their relationships. It’s here already, it’s live and it can be owned by all who dare. Yet it’s still being debated.

In June 2023, the Otivo Superannuation Report found that a staggering 11 million Australians are desperately seeking more financial support from their superannuation funds. With rising interest rates and inflation at an all-time high, almost nine in 10 Australians (86 per cent) express their desire for financial advice from their super funds. Moreover, more than nine in 10 Australians (90 per cent) yearn for guidance on issues that directly impact their ability to contribute to their super, such as mortgage payments, overall cash flow, and debt consolidation. They want it, need it, and if it’s provided, the pressure is going to be contained if not eased.

There is only one way to address the sheer volume of demand and it’s the introduction of high-quality digital advice through what the regulator terms a “relevant provider”. The incorrect debate has been all around “lowering the standards” to allow accessibility through non-relevant providers, and yet, the standards can remain the same and the consumer protection level can also be maintained through a relevant provider using digital technology to provide retail advice.

Corporate Australia also has the opportunity to be doing more to help the average Australian – these are employees, everyday Australians who are being forced to sell homes, move houses, and dramatically reduce spending on everyday essentials, just to make ends meet. The corporates can introduce employee benefit packages around financial wellbeing making digital advice partnerships flourish and accessing the lower paid workers who need the most help. It’s a great employee benefit, it has fantastic social balance and it does the right thing by everyone.

Super Funds are essential owners of advice to the masses. Right now, superannuation providers are restricted in being able to provide sufficient financial advice, leaving more than 13.8 million working Australians with limited to no access to advice. We know Australians trust their super funds, so they’re perfectly positioned to provide scalable and affordable online advice to help more of their members. Yet they are struggling to commit to this development out of fear of failure and risk. Yet from the Otivo report, members obviously want to see movement across the board that acts quickly in helping them now, not just those Australians who are retiring or can already afford financial advice.

Australia has already taken steps to raise the standard of financial responsibility for retirement through superannuation. Now we need to take it further by ensuring that affordable financial advice is accessible to all, regardless of their income. Our goal as a whole should be to aim to achieve financial freedom and betterment for all Australians through collaboration between employers, super funds, financial advisers, and wealth companies.

It is time to be brave and embrace risk management by grasping the opportunity of low-cost delivery in assisting those who desperately need financial support. The solution to this issue lies in providing employers with financial support programs, such as employee assistance programs for their employees, while super funds must offer comprehensive and accessible financial advice through technology.

Where to? Corporate Australia, super fund trustees, banks of Australia, financial advice profession, the call to action is clear. Australians are in dire need of your help. We need to step up to provide, support and use the technology that exists that can step in and help those who need it most. It’s time to do more, come together and build a future where every Australian can achieve financial security regardless of their financial literacy. Embrace digital advice, its delivery, and onboard it as quickly as possible – it’s not about the risk of doing it, it’s all about the risk of not doing it.

Ian Knox is the chairman of Otivo