The research, carried out by Iress and Griffith University, saw a near tripling of members switching investment options between 1 January 2019 and March 2021.
Of the over 42,000 switch decisions made, a 50 per cent increase in “bad” superannuation switching decisions were identified as the COVID-19 pandemic progressed.
Iress chief executive Andrew Walsh said that the research was undertaken to better understand the relationship between financial literacy, access to advice, and decision-making by superannuation members and what they found was that during market downturns, people were making decisions without considering financial advice.
“One of the recommendations from the research is that more can be done to make it easy for super funds to guide and advise members’ financial decision-making,” Mr Walsh said.
Mark Brimble, professor of finance at Griffiths University, added: “What we found was the ease with which members are able to switch through online channels unadvised, combined with heightened consumer awareness of fluctuations in financial markets and substantive media coverage through the pandemic, led to an increase in both switching activity and negative outcomes for members.”
Griffith Business School’s senior lecturer, Dr Kirsten MacDonald said that while access to superannuation switching is a good thing, those with lower levels of financial literacy and access to advice are at risk of making poor decisions.
“It’s imperative that superannuation trustees and policymakers consider strategies to support members making more effective decisions about their superannuation,” Dr MacDonald said.
I see the answer is super trustees should do more to educate their members, but its not pushing for members to obtain advice. One of the most important aspects of seeing an adviser is the client being educated before any of these events happen.
What happens when you get rid of advisers (under Hayne2) & charge fund members ongoing intra-fund advice fees (for no service)
“Double Edged Sword”??? If a pharmaceutical company gave me access to their products and I could decide what to take, would this be seen as a good thing?