Speaking at the Stockbrokers and Investment Advisers Association conference in Sydney, Bell Financial Group co-chief executive Arnie Selvarajah argued that there is a “real imperative” to create more self-funded retirees.
“I think we’re in a midlife crisis. I think we were mature, we’re experienced, but we’re looking around and asking ourselves, what’s next?” Selvarajah said.
“I think there’s an imperative for change. There’s a lot of positive about this industry, but I think we all know that there has to be change.”
Top of the list is the number of Australians over 65 that are reliant on the pension to some level, with the CEO noting that 58 per cent of this cohort receive a pension, while two-thirds of those are on a full pension.
“Our pension bill, or our superannuation payment bill per annum is about $55 billion a year now, and that’s projected to go to $110 billion by 2050,” Selvarajah added.
“In that same time, the ratio of work age people relative to pension earners is going to go from 4.1 to 2.7, so demand is going up and supply is coming down. There’s a real imperative as an industry that we work out how to provide advice and to create more self-funded retirees, or the country is going broke.”
Also speaking at the event, Otivo chair Ian Knox said the challenge for wealth managers and advisers is making the process of getting advice to consumers “scalable”, given there are “nearly 14 million people in this country seeking guidance and advice, and we’ve got 14,000 people doing it”.
Responding to this point, Selvarajah said outside of the roughly 2.2 million people currently receiving advice, the probability of the rest of that 14 million “getting to a point where they can fund themselves through retirement is low”.
“There’s an imperative for us as an industry to change, to be able to work out how we can get them that advice – and technology, obviously, is part of that solution,” he said.
“I think the last imperative for change is that the clients have changed. What they want from us as an industry has changed. There’s a generational change to how they use technology. There’s a generational change to how they engage with advisers or with providers of service.
“All those three things means that we’re at a point where we have the opportunity to actually to grow as an industry, but it is going to take some thinking on our part and how we’re going to change what we do today.”
He added that while clients are seeking a single point of contact – one adviser, one portal, one trusted relationship – it is difficult to get everything they need from one provider.
“At the moment, as an industry, we’re very siloed in how we provide services to our customer base, our client base or the investors. We find that investors effectively go to multiple providers to get all the things that they need,” Selvarajah said.
“But that’s not necessarily how they want to deal. The top reason that people don’t engage with advice today is they can’t engage in the way they want and when they want.
“As an industry, we’re not designing the service proposition as an industry to supply it to clients in the way they want to receive it. But I think if you wrap all of that up, there’s this one thing that they need from us, and that’s peace of mind. We have to think about how we deliver that, rather than performance numbers and rather than thinking about portfolios, we’re going to start thinking about people.”
Vanguard Australia managing director Daniel Shrimski echoed these comments, adding that wealth managers and advisers will continue to move further towards relationship management.
“[Advisers] are going to find themselves sort of focusing more on the behavioural coaching, the goals-based advice, and I think a lot of the investment management, the stock picking, might actually end up with the investment specialists and the investment management folks within firms,” Shrimski said.
This, he added, should lead to advisers ultimately being able to “increase the size of their books”.
“I think we’ve democratised investing. Over the next 10 years, we’re going to democratise advice,” Shrimski said.
“I think there’s no doubt about that. I think the second one is, as it relates to that, is the personalisation of advice. You think about spending habits that people have, how people are living their lives, how they want to live their lives, I think the technology working in the background will create personalised advice for the individual, not something generic, which is maybe where we are today.
“So, personalised advice, that high-touch white glove service, that’s still going to be needed. Nothing of that sort goes away, but the technology will be doing its thing in the background, and I think it’ll create great solutions for investors, and it can be really powerful.”
Self-funded individuals are not dependent on the Government and don’t vote Labour. Labour are all about creating more voters.
I’m more than adequately self funded, voted Green first (to help keep the useless bastards honest) and independent next (so they were elected but didn’t get my first oreference).
Once always voted Liberal but couldn’t even consider it since John Howard and Peter Costello began the social disintegration of Australia, in part by over prioritising the attractiveness of personal wealth management at the expense of encouraging wealthier people to do things productive with their money, rather than becoming parasites using the property market and super tax breaks to bleed the system
The Hayne train is like a gift that keeps on giving but what would the retired out of touch and out of his depth ex judge know? Thanks again for nothing…!
Boring. Same things were being aide 10-15 years ago. The smart operators have been focusing on relationship management for years.
Interesting that Knoxy says there’s 14,000 people giving advice. He seems to have sensibly discounted the FAR numbers by about 1,000 to account for non practising registrants.
However he should have said there’s only about 14,000 giving advice LEGALLY. There’s at least 3-4 times that number providing illegal advice, including accountants, real estate agents, and super fund call centre staff.
I’ve said the same thing for over a decade, yet, in that time, all we have succeeded in doing is chasing half the advisers out of the industry and doubling the cost of advice such that only those who don’t REALLY need it can afford it. Unless we urgently address both the adviser numbers and cost of advice, the problem is only going to get worse!
Canberra morons have done an astounding job of failing Australian consumer from sensibly regulated advice.
Give yourselves a massive uppercut Canberra clowns.
Or is it by design?
At the moment, as a comparison, it’s like the only flying (ie advice) options are Business Class or First Class. Thanks to the insane Hayne RC that imposed this lawyer inspired red tape, “Economy class” advice for millions of Australians has been eliminated. Until the major firms push Mulino to get rid of the Annual Fee Form red tape (that doesn’t exist in any other nation on earth), lower cost retail advice is not coming back again. You cannot charge low annual fees when the insane red tape involved costs more to administer.
Or the Industry Super backpackers, uneducated, unqualified toed sales agent provide budget sales / FUM retention that is all paid for by Hidden Commissions to all ISF members when most members will pay Hidden Commissions for No Service.
Compare the Pair, ISFunds love Commissions now.
I naively thought this type of two-tier system only occurred in third world countries with failing democratic checks and balances?
That’s exactly what you get when you have a product provider who are ‘friends of the party’.
In my view, it’s a filthy system that needs to be dismantled immediately.
self disclosure with my chairing of Otivo : but check it out – the whole business DNA is about enabling advice to be accessed cost effectively and also through advisers – it gives an advice practice the solution to have scale that everyone talks about and where the platform and front end software doubles down to make it too hard. An adviser can roll it out and deal with hundreds of clients in an affordable compliant way. Thats got to be good for Australia and the advice profession in my mind. Good luck Anonymous don’t give up.