The Deloitte report sought to investigate the dynamics of the Australian superannuation system over the next 20 years to 2038.
It found that funds are continuing to offer limited advice and robo-advice to their membership at growing rates.
Further, the report noted the two levers that will have the greatest effect on ultimate superannuation balance at retirement are contribution rates and investment strategy, both of which are in a member’s control.
“Therefore, the earlier a member gets appropriate advice on making the most of their superannuation, the better the impact will be on their final retirement outcomes,” the Deloitte report said.
“There was a ban on the deduction of any advice fees from MySuper accounts, as well as limits on such fee deductions for choice products among commissioner [Kenneth] Hayne’s recommendations in his report on the recent Royal Commission into Misconduct in Banking, Superannuation and Financial Services Industry.
“It remains to be seen whether this limitation on advice fees within super will have an impact on individuals being advised in a way that considers their holistic financial circumstances, and how their superannuation benefit fits into that.”
Deloitte noted that total superannuation assets rose from $2 trillion at 30 June 2015 to $2.7 trillion at 30 June 2018. In its latest modelling, Deloitte projects that it will continue to increase over the next 20 years to $10.2 trillion by 2038.
Deloitte actuaries and consultants principal and author of the report, Diane Somerville, said the projections reflect the legislated increases in the superannuation guarantee from 9.5 per cent to 12 per cent by July 2025, with the next increase to 10 per cent, which is scheduled to occur from 1 July 2021.
However, she also said an important caveat to that growth trend is that the current low interest rate environment that has continued to prevail both in Australia and globally for more than five years is likely to remain the ‘new normal’.
“Despite this low interest rate environment, super fund returns continue to be strong. In spite of short-term volatility, funds have consistently earned robust returns over the medium term, ensuring average balances at retirement have increased,” Ms Somerville said.
“Add to this the fact that many members have received superannuation contributions for a significant proportion of their working lives.”
[quote=Anonymous]so when the market tanks and the robo advice recommended a high growth portfolio – where and how do I lodge my complaint? That’s right, it’s the members fault…
Australian’s complain a lot. once robo comes in and is the only option, the only complaint the Australian consumer will be able to make is against themselves. thank god i am leaving this god forsaken industry.
this will be good as there won’t be any need for AFCA, we can reduce huge numbers from both AFCA and ASIC all the advisers are going to be gone anyway or servicing only HNW
so when the market tanks and the robo advice recommended a high growth portfolio – where and how do I lodge my complaint? That’s right, it’s the members fault…
your really dont understand advice regulation in Australia do you?
Now ASIC’ Shipton has admitted on Hansard Record that personal advice is being provided under the Intra-Fund remuneration regime (ie no opt outs for fund members, no FDS being provided to members etc], the Govt will have to legislate to clean this up, so as to exclude personal advice/marketing reps under IntraFund, separate from basic administrative servicing of members. To have such an admission in the Hansard without a consistent regulatory approach, is not tenable long term. Expect a bill to address such a regulatory inequity.
The term intra fund advice has to go. ASIC appear to be either confused or compromised in what constitutes advice.
Using phone call centres or roboadvice algorithms will provide at best an estimate a client’s personal position and at worst grossly mislead due to failing to take into account the client’s circumstances. Intra fund information or insurance calculation estimators would be more appropriate terms to use.
This is the only logical method to roll out advice to funds that have literally millions of members. Running people through a risk profiling tool and a insurance needs assessment tool – ASIC can oversee and give their blessing to these tools and have a licensing model for this – would cut down on the number of intra fund advisers. Probably a good thing.