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Simplifying advice will help close advice gap: panel
Simplification and advice ‘modules’ will help superannuation fund members seek advice, according to a panel.
Speaking on an online Conference of Major Superannuation Funds (CMSF) panel on solving the unmet advice gap, Hostplus head of advice and financial planning, Maurizio Lombardi, said members did not necessarily meet with an adviser for comprehensive advice looking at their entire situation.
“Solving the unmet advice gap needs could potentially be by ‘modulised’ advice areas that are typically discussed in a full comprehensive process,” he said.
“Modulising it by just focusing on cashflow, or insurance, for example.”
The panel agreed that people generally could not articulate their goals and were uncomfortable talking about their finances.
“That’s a big barrier for people seeking advice. People see it as a defeat that they need help and we need to help them realise that they are not defeated and can work out a way to better utilise their money to achieve their goals. That would go a long way in getting more people to seek advice,” Lombardi said.
“Going through a full comprehensive advice process at first is like being thrown in the deep end. Simplifying, destigmatising, and modulising advice areas is a step in the right direction.”
Also speaking on the panel, First State Super group executive advice, Sarah Forman, said funds needed to stimulate members when they reached out to the fund.
“Start the connection with something that really matters to the member, build trust and help then with what matters most to them. We need to explore what members’ goals are, reach out to them, whether it is online, face-to-face, or on the phone,” she said.
She noted that advice categories like intrafund, comprehensive, and general advice were “meaningless” to members and were industry jargon and agreed that simplification was needed.
“There needs to be conversations about calming anxiety, explaining markets, and volatility. We need to give confidence and comfort to alleviate anxiety through the general advice banner without so many constraints,” she said.
Lombardi noted that one of the biggest challenges was that people did not always fit into one advice category.
“Where you have members that have intra and comprehensive advice needs – how do we best put that member in front of the right person for the first time? That’s something we continue to work on,” he said.
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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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