Club Plus Super head of marketing Stefan Strano said financial advice “can be beneficial” because it can break down some of the complexities and the uncertainties relating to superannuation.
“Financial planning helps people understand how super works and what their options are,” he said. “It supports them through their working life into retirement.”
It can also help ensure people have all the right products and that they understand their options, he added.
The comments follow research conducted by Club Plus Super which indicates that Australians need to start reacting to their superannuation earlier than they are.
The independent survey of 843 fund members showed that while 51.6 per cent of respondents understood how much money they will need at retirement age, only 32.1 per cent said that they are making extra super contributions to their super fund.
“It is clear from this research that the super industry needs to continue to work at educating and incentivising Australians to adequately plan for their retirement – otherwise we risk making this [perfect] storm unnecessarily severe,” said chief executive officer of Club Plus Super, Paul Cahill.
In addition, the research showed that of the respondents not certain that superannuation was a good area to invest, more than three in five cited financial markets (62.8 per cent) and the global environment (59.3 per cent) as central reasons.
“People need certainty regarding products, they don’t like not knowing what their return will be from their super. The effects of the GFC still resonate,” Strano said.
Dave CAF Stu and others
Some have hit the nail on the head
We are planners and to sum up a large part of our job–think–social science engineers. We are the ones who put and hold financial lives together and try to ensure goals -lifestyle- tax effectiveness-estate planning etc are effective for their purposes. And yes-we are at times a sounding board. If planning is all about basics and that is what a client wants-so be it at a budget price. Like many other planners-CFP-CA- CPA-IFA, we advise at a different level with client interest in mind AND yes, they do and will and WANT to pay for such professional services, WHY—because we satisfy a need that these clients deserve through various strategy. Its strategy and advice and the right environment that they want- even those we assist with centrelink, products are only the tools to help strategy. The real planning world is fun because we in the main achieve results for clients and communicate well in good and bad markets.
Overall, rich people still generally want to be MORE successful and satisfied.
This is where the discussion around goals is so important, because most clients have as many, if not more intangible goals we can help with as they do tangible.
For example, achieiving a certain amount of income in retirement is just 1 tangible goal, but saving time, worry, stress, feeling secure, having peace of mind and confidence in the future, not arguing with spouse about money decisions, being able to bounce ideas off someone, having some councilling when markets are down, etc are all intangible goals that are very important and people are willing to pay very well if you can deliver on their emotional needs.
CAF – The clients you refer to make up the bulk of my client base.
Only a small portion of whom are on easy street. The majority still have goals to achieve. Most have high lifestyle wants and genrating $150k pa passive income from $2m is not much different to generating $40k from $300k (with clink). Many have other goals too – helping family, charities, etc. The advice focus does though tend to focus more on investments and tax minimisation – achieved through highly tailored portfolios of firect investments. Insurance is less relevant, but in place of this advice is more complex investment and estate planning advice, inc. family trusts, etc.
Like all clients, software adds no value, advice does. One of the biggest things these clients value is having a competent professional putting in the time, energy and worry of managing their complex affairs so they dont have to.
Dave – all valid points.
But tell me… there is lots of talk about potential and understanding how to get there. Al perfectly valid for those that need to get there 🙂 How do you deal with the other end of the spectrum?
Those that have had maybe a business or have already been very successful in life and now are about to retire with say $2m in their SMSF, and their home paid off and children launched into the world. I think there are a lot of folks in this sort of situation, maybe less than 1%, but still a big enough number that can and will pay for advise.
Insurance needs are probably minimal if at all, as they effectively self insure due to rapid escalation of premiums.
They could probably go into term deposits within their SMSF and live a very comfortable life with little risk.
How does the average licensee software package add significant value to their position?
Maybe a serious CPA?
Overall, the vast majority of people do want to be more successful and satisfied with their finances and lifestyle.
The problem we face as an industry is how to better go about educating people that a good planner can help them do this.
Planning is not about nice statements and charts, its about maximising peoples potential and ability to get what they want out of life.
The challenge is for our industry to get this message out there and doing so is tough when so many average planners still focus discussions on products and investments rather than better articulating that all that stuff is just the means to the desired end – helping them be more successful financially which allows them a better chance to get what they want out of life and life their desired lifetsyle.
STU – 3 points:
1 – Your perception of what Financial Planners seems misguided, either by a lack of dealing with planners altogether, or a lack of dealing with quality planners. Your comments certainly don’t represent what I do for clients.
2. I agree that 29 out of 30 people probably dont want to pay for advice, but I’d suggest that there is a big difference between what people want and need. Often after a quality discussion those people actually realise what they need and the risks of not getting professional guidence and are happy to pay for good advice.
3. Given the population and the the number of planners, our industry only has the capacity to handle 1 out of 30 people anyway and while I cannot speak for other planners, I am only interested in dealing with people who WANT advice and WANT to be engaged in actively working towards their financial and lifestyle goals.
Dave W, I work for a retail platform not an industry fund. I’ve worked for three of the largest retail platforms over 13 years and have spoken to hundreds of advisers, aligned and IFA. I think my experience stacks up. My point is that the ratio of advised to non advised investors would be 1:30. The 30 in that ratio don’t want to pay $2,500 to be told they need to up their insurance, invest in a number of managed funds and be given nice cash flow statements and asset allocation charts. Good luck to you Dave.
Stu
with respect, you are missing the point. There is a group that require/need limited advice. The problem is that clients don’t understand the nexis between other aspects of planning and how it helps them. high net worth comment is WRONG. We service clients from all walks of life and we have a number of centrelink client clients who value the service as well as those better off. If you ONLY deal in one aspect of planning and your industry fund- you need to broaden your experience and skill set before making comment. The old story of us and them-wouldn’t it be better if we all have similar skill sets and aimed for best outcomes. Nice banter but a waste of energy- get with the real world or miss out by hiding behind industry-union-labor MIS-ideals
Stu – you said ‘Look at the research – rightly or wrongly people don’t value comprehensive advice. ‘
I think the issue is getting comprehensive advice, in many situations. I’ve seen so many standard like plans it is a joke. Many I suspect are the result of data entry into the licensees software, and maybe a couple of what if scenarios. The output is often bland, full of ‘get out of jail’ statements, and often no more than the average person could work out themselves for a few hours on the web.
I suspect that this has been driven by the large banks etc that are so scared of a planner changing even one word in the software produced output, that most just toe the line.
And for this software generated output they want to charge several thousands of $.
As soon as a client has some unusual situation, it is generally noted that this is outside of the plan.
After all their job is at stake. But, they are drumming down the entire industry.
Look at the research – rightly or wrongly people don’t value comprehensive advice. What ever you think of limited advice, it is what the vast majority of the public want. The sooner you adapt to that the better for the whole population. Most advisers I speak to say that they only offer holistic advice. It is the new ‘I only deal with high net worth clients’ quote of the past decade. It is a pretty crowded space! Once again the industry funds will steal business from under your nose because of your inability/unwillingness to adapt to your model.
While I agree with the comments its good to see the super funds beginning to realise that it is a [i]planning[/i] solution that is required, not just a [i]super[/i] solution
Couldn’t agree more Dave W. Giving limited advice about super can give consumers a false sense of security that they have taken care of their planning needs. What about tax, estate planning, wealth creation, debt reduction, cash flow management, etc… For most people MOST of their goals are not retirement related and thus will not be addressed by limited advice from their Industry S/F.
How can anyone accurately suggest how a S/F should be invested or what level (if any) salary sacrifice is suitable or what insurance is appropraite without taking their whole situation into account?
The industry seems to be worried about limited advice and making it easier and cheaper for people to obtain advice in a piecemeal manner, and although this is slightly better than no advice at all, this could be very detrimental.
Imagine if your Dr just focused on your exercise to make you ‘healthier’ and disregarded your diet…
Nice honest comment and heading in the right direction, but it still astounds me that your mob is still only addressing super and not the complete picture. Missing the rest of the client needs can be detrimental to the outcome and guess what–planners come up looking bad again because of that omission.