Superannuation funds need to develop intra-fund advice models to better address the rising cost of financial advice for members, Rice Warner suggests.
Consumers overwhelmingly do not want to pay a high price for advice, with many wanting to pay no more than $500 even for a comprehensive financial plan, Rice Warner said in a blog.
To address this problem, Rice Warner suggested that superannuation funds develop intra-fund advice models for its members.
“These are simple single-issue pieces of advice which are given free to members or provided at a nominal cost,” it said.
“As more members approach retirement, where the circumstances are far more complex, the demand for personal advice will grow. Yet, no fund has yet been able to marry the needs of members approaching retirement cost-effectively.”
Rice Warner said technology offers one avenue for satiating the tidal wave of incoming demand. It cited recent research from ASIC that found that while the take-up of digital advice is still low, 37 per cent of those who didn’t go ahead with their plan to receive advice would consider digital channels instead.
“Not only can digital tools provide an alternative for members seeking advice at scale, but they can also increase engagement,” Rice Warner said.
“Research by CEPAR (Centre of Excellence in Population Ageing Research) in association with Cbus has shown that just providing members with a retirement income estimate in their annual statement increased both the proportion making voluntary contributions and value of those contributions by a third or more.
“One can only imagine the cascading effect that digital delivery of such estimates could provide, with the option to take it further through online tools that can provide personal advice, with pre-filled information from the fund registry and the option to implement on the spot.”
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