The appetite for scaled advice from direct investors and superannuation fund members is increasing, CoreData and Mercer have found.
Although 64 per cent of direct investors do not seek advice, CoreData’s 2012 direct investors report shows nearly 60 per cent are interested in advice catered to their specific advice needs.
Among those interested in scaled advice, one off advice as needed was preferred over piece-by-piece advice and more than half said they would prefer to receive scaled advice from a financial adviser.
“There is also strong appetite for direct investment options through super, which some super funds are already offering. Close to half of respondents would be interested in investing in specific Australian shares or term deposits through their super fund,” CoreData head of advice, wealth and super Kristen Turnbull said.
The number of direct investors is continually increased, driven by the market environments, a desire for flexibility and control and increase of social networking. An increase in the number of direct investors seeking advice is also likely to increase.
“I think that if scaled advice does manage to take off, obviously the industry is still waiting for clarification around how that will be done, but assuming that does go ahead, I think there definitely will be an uptick in direct investors seeking advice,” Turnbull told InvestorDaily.
She said there is a need for financial advice but that the traditional way of offering advice is not suitable for direct investors.
“[But] absolutely, if the industry manages to fill that gap then we should see more direct investors seek advice in the future,” she said.
In addition, the latest research from Mercer has found that members of superannuation funds who receive advice, limited or general, from their fund as twice as likely to make additional contributions and have higher overall average contributions.
“Mercer’s analysis of member activity shows that individuals who access simple advice are more likely to take subsequent steps to boost their retirement savings,” Mercer financial advice business leader Jo-Anne Bloch said. Members who access limited or general advice are twice as likely to make additional contributions and are twice as likely to make a beneficiary update, the analysis said.
They are also five times more likely to make an insurance underwriting enquiry and three times more likely to make an investment switch, noting that often the advice given is to recommend not switching.
“Our findings prove what we know intuitively – when members are shown the benefits of advice that they can understand and that is relevant to their needs, they are much more likely to take positive steps to boost their savings and protect their wealth,” Bloch said.
“Therefore, making simple advice accessible and cost-effective is one of the most powerful tools we have as an industry to increase member engagement and maximise Australians’ retirement savings.”
The results were drawn off research conducted from members of the Mercer Super Trust.
