Specialist advice software needed for super

15 June 2010
| By Benjamin Levy |

Super funds can’t rely on their existing software to provide rapid transactional advice, according to the director of Provisio technology, Cameron O’Sullivan.

O’Sullivan said some super funds that had already invested heavily into software built for full advice preferred to “tinker” with their existing systems, but that such a system lacked profitability and scale.

“Taking a system that currently requires four to five hours of time to generate a statement of advice and turning that into a system that now asks for half a dozen inputs, models the same strategy, and can generate a statement of advice in 15 minutes, that is a completely different process,” O’Sullivan told Super Review.

“It’s not something that those tools are going to step down to easily.”

O’Sullivan said one institutional fund was relying on a cut down version of their software to provide transactional advice, but could only generate two statements of advice per day for each person in the team.

The existing software also doesn’t allow super funds to optimise the advice they give the client, leading to an inferior statement of advice, O’Sullivan said.

“If I model a client through transition to retirement advice ... it will ask how much pension I want [in the transition pension entity] ... then I tell it how much [salary sacrifice] I want [and it will] tell me ... what my super is going to be in ten years. But in no way has it assisted me in running a transition to retirement strategy, because it won’t optimise what level of pension I draw, or how much I salary sacrifice.”

While some super funds had built optimisers, they only used minimal or maximum pension levels and did not consider any range in between, O’Sullivan said.

As a result, the statement of advice they produced was inferior and produced a benefit worth $5000 to $10,000 less to the client than an automated rapid advice tool, he said.

Super funds needed to build software capable of providing rapid advice tools from scratch, O’Sullivan said.

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