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Advice a key super component
Financial advice definitely adds value for members of superannuation funds, according to actuarial consultancy, Rice Warner.
The consultancy has pointed to recent research it has conducted for State Street Global Advisers which it said had shown a positive correlation between those who were more financially savvy and who received financial advice.
It said such people had an understanding of retirement products, confidence in meeting retire goals and a lower reliance on the age pension.
The Rice Warner analysis, published on the company's web site, said that in comparing the results between those who were advised against those that were not, advised members were substantially more confident in meeting their desired retirement goals and income.
"For those who are already retired, a substantially greater proportion of advised people say that they have maintained their lifestyle into retirement, while one third report it has improved," it said.
"Those who are advised are also much more likely to contribute extra to their superannuation and to have specific objectives. Therefore, they are able to see, together with an adviser, if they are on track or not," the Rice Warner analysis said.
It said the study had represented an important piece of work that also helped to further debunk the myth that a majority of Australians take their superannuation as a lump sum and spend it, relying instead on the Age Pension.
It said the SSGA research showed that fewer than one in five people plan to take their superannuation as a lump sum.
"In fact, of those who are retired, the survey showed that only 13 per cent took their superannuation as a lump sum," the analysis said noting that other studies by Rice Warner had shown similar results and the lump sums were often reinvested for retirement income.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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