This comes at a time when the industry grapples with ways to service the largest number of retirees in this country’s history begin to hit the market, many of whom are in need of advice.
One way that super funds in particular have been looking to fill the gap is through digital advice offerings, which has been adopted by financial giants such as AMP.
However, according to head of Midwinter Advice Products Michelle Lusty, doubts about how much clients and members will engage with digital advice have been persistent.
“Many in the industry will tell you members won’t do it themselves, they must have a human in the loop, and that is certainly the case for some aspects,” Lusty said at an industry event in Sydney last week.
“But for members that just don’t have that option, these digital tools are getting real use and real results.”
She added: “Last year, Aware launched their Retirement Manager. Since the launch, 96 per cent of members that use the tool can actually draw down more than the legislative minimum, and for members using the tool, 15 per cent of them have gone on to actually open an account-based pension.”
Nicole Kennedy, managing director, wealth and advice at Bravura shared a similar sentiment.
“Once you make it available and easy, that is of course people’s preference. They’ve been shocked at the uptake.”
Despite this, she said there is often some growing pain with members still reaching out for advice over the phone, however, once they know it’s there, they are more than happy to engage with it.
“Some members don’t know it’s available – naturally – or they don’t expect it of their super fund. You have a transition period where they might call up and you’re walking them through doing it online, but once they see how easy it is, they naturally interact through those digital channels from then on.”
One question that has always been central to discussions about digital advice is a simple one – what does it mean for in-person, independent financial advisers?
It’s easy to go to a worst-case scenario: cheap, personalised digital advice through something every Australian working has, their superfund, supplementing the need for slower, more considered but expensive in-person advice.
So far, this hasn’t proven to be the case.
“Digital advice is not pursued as an end in itself. It is framed as part of a broader service ecosystem, supporting member decision-making across accumulation, transition and retirement,” a recent Financial Services Council report found.
Lusty has also found this to be the case, with those with more complex advice needs still needing an in-person adviser.
“Somebody that has more than just super and their family home and access to the age pension, there are often other things that need to be dealt with outside what the digital journey can offer. It’s a fairly tight scope of advice of what [digital advice] can offer, and so they should go and see a financial adviser.”
For Bravura and Midwinter, the goal is far from trying to replace advisers, but to ensure an ever-growing cohort of Australians isn’t left behind in an increasingly complex, and large, retirement market.
As Lusty said: “It’s about how you do simple personal advice at scale, and the comparison is not to what an [independent financial adviser] can do. The comparison is that some of these Australians wouldn’t have any advice at all.”
