“Surprising” full financial advice super trend

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“Surprising” results have been revealed in a new report that indicates superannuation providers are increasingly offering the services of full financial advice to their members.

The Association of Superannuation Funds of Australia (ASFA) has just released the report, which uses research conducted by ASIC and Rice Warner, and looks at the make-up of intra-fund advice in superannuation.

ASFA CEO Pauline Vamos told Wealth Professional she was surprised by the trend towards full financial advice being offered by superannuation providers, which was evident in around 85% of industry funds.

“As superannuation providers become a trusted source of wealth for people this is great to see,” she said. “Many of the super funds own or have in interest in a financial planning firm. This provides career paths for planners – the younger people can start off with simple advice and move into more full-blown planning.”

It also proves that the superannuation industry and financial planning can work hand-in-hand, Vamos said.

Despite this, the report did show that the take up of this advice was low, and most respondents (approximately 75%) were unwilling to pay more than $250 for advice.
Piece by piece – known as simple advice – was the preferred type of advice with 33% of the total respondents choosing this option. However, having a comprehensive plan reviewed regularly by a financial adviser was a close second with 25% in favour of this.

“It’s not that surprising that people only want to pay up to $250,” said Vamos. “The average member has very little money. They’re paying off a mortgage, making sure they put food on the table, and are focusing on making every dollar they put in work hard. Quite rightly people say, ‘you have an obligation to help me, and I’m not willing to pay much’.”

As published in Wealth Professional yesterday, the report stated that the median cost for the built-in compulsory intra-fund scaled advice equated to $2.81 per member per year, with an average per member per year cost of $9.65.

Readers who commented on the article were highly sceptical that the advice could be so in-expensive.

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