Despite the financial advice market in decline, super funds must continue to grow their advice offering in more ways than just face-to-face, Tria Investment Partners has said.
In its latest Trialogue article, the superannuation consulting firm said financial advice has been “causing headaches” as the industry seeks to fix problems of the past and innovate for the future.
Tria said there is a macro trend of reducing adviser numbers. Despite this, there has been a constant increase in the hiring of financial advisers by super funds, which has led to the number of advisers nearly doubling over the last five years.
“While super fund advisers still represent only single digits as a proportion of the total advice market, the upward trend in an otherwise declining market is clear,” Tria said.
And research shows there are benefits to advising super members.
While only 10 per cent of members older than 45 received financial advice from their fund, those who did made voluntary contributions of $12,500 higher than their unadvised peers.
Almost all personal financial advice was delivered via face-to-face, with less than 10 per cent delivered over the phone or digitally, Tria said.
“These statistics show a clear business case for having a quality advice process, and begs the question – should advice be a cost centre? Because it turns out providing advice to members not only improves engagement and retention, but also improves assets under management,” Tria said.
However, the research also shows that the reliance on face-to-face advice is unsustainable.
“Each year we have more members retiring, most will need help of some kind, and a growing portion will have balances worthy of financial advice, Tria said.
“Assuming funds don’t participate any further in the war for talent in advice, they have to consider carefully how they get phone-based advice to deliver to their promise of member value and efficient cost, and how digital channels can be effectively leveraged for advice.
“Advice done well can lead to greater engagement of members and larger contributions to their super – a win for both the industry and for members by providing better retirement outcomes. And we’d suggest the time for funds to get their advice model right is now.”
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