Industry super funds are struggling to convince members to seek in-house financial advice, but digital advice may provide the key to a pipeline of advice clients, according to consultancy firm NMG.
Noting that advised members of industry funds routinely move their superannuation into different products, the research and consulting firm said industry funds are facing an “existential crisis” in providing their members with personal financial advice without changing their already established brand.
Previously, industry funds have been limited in their capacity as meeting the advice needs of their member bases has been untenable, NMG said.
“Even if the growth rate of advisers servicing industry fund members were to double from today, by 2020, one such adviser would still be expected to cover some 2,000 pre-retirement and pension members per year,” NMG said.
“Efforts by funds to offer this service so far have had mixed success as boards debate whether to insource or outsource the function, how to charge members and how to avoid even the slightest association with vertical integration.”
However, NMG said that through offering digital advice services, industry funds would be able to build a pipeline of members seeking advice and allow those funds to potentially “establish themselves as the natural provider” of those services.
“Digital advice is the game changer. It can help funds get a head start on the conversation,” the firm said.
“The benefits to the fund are many – member engagement and satisfaction to name a few – but possibly most importantly, should members seek face-to-face holistic advice later in life, the fund has a fighting chance of being the first provider they turn to.”
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