Funds of knowledge
High costs put many people off seeking a financial planner, but super funds are keen to fill the gap by providing a free, basic service
Plenty of Australians are crying out for accessible, affordable financial advice. A 2019 survey by the corporate regulator ASIC found two out of five of us would like financial advice, with issues around growing super (31%), retirement income planning (37%) and aged care planning (18%) being among the key areas where we could benefit from expert help.
Yet just one in four Australians has received financial advice, and the overwhelming stumbling block is the cost. Quite simply, one in three of us believes formal advice is beyond our budget.
The price tag isn’t the only hurdle. Financial advisers are leaving the industry in droves. It’s largely the result of the increased educational standards required to be a licensed adviser – an outcome of the financial royal commission. Australia has just 17,000 licensed advisers at present, down from 20,674 at the start of 2021.
Fortunately, there is a solution, and affordable financial advice could be hiding in plain sight within your super fund.
Advice through super
“Almost every superannuation fund has a range of services available to members designed to help them get more out of their funds – and one such service is financial advice,” says Alex Dunnin, director of research at Rainmaker Information, publisher of Money magazine.
Dunnin believes more of us may turn to our super fund for advice in the future. “There’s really no option. All the reforms in financial advice, even though they were done with good intentions, have thrown the financial advice industry under a bus. There just aren’t going to be enough financial planners.”
He says super funds “are desperate to talk to their members”. However, the real driver that may prompt people to reach out to their fund is that “it might be the only way a lot of people can afford to buy advice”.
Paul Watson, group executive, member experience at Hostplus, one of Australia’s largest industry super funds, confirms the appetite for advice through super. “Over the last several years, we’ve certainly
seen an increase in members seeking advice and meeting with one of our superannuation advisers or financial planners. This has coincided with a period of particular uncertainly brought about by the global pandemic, volatile investment markets and other world events. In these uncertain times, we’ve been especially pleased to have seen many members seek out our guidance and advice.”
What’s available
Super funds typically offer several tiers of advice. Exactly what’s available differs between funds, though you can expect general or “simple” advice to be on the menu. Best of all, that first level of advice is free. So, it’s worth using it as you’re paying for it anyway.
General advice is usually available over the phone, face to face or via email or webcam depending on your fund. It won’t cost you anything as the expense is factored into the fund’s fees.
The downside of general advice is that it doesn’t take into account your individual circumstances. So it’s strictly limited to information about your current super fund. It covers the basics such as how to grow your super or choose between investment strategies. This type of advice is not an option if you want to know whether you’d be better off switching to a different fund.
Marisa Broome, principal of Wealthadvice and chair of the Financial Planning Association, sums it up: “General advice is essentially product information.”
Further along the spectrum, advice that’s more tailored in nature can also be available through your fund. It may be delivered by its team of in-house financial advisers, or be outsourced to a third-party.
This type of advice may cover a single issue. Or it can be holistic, meaning it is based on a complete picture of your situation and can help you identify how much you’ll need in retirement, how your investments can be aligned to your goals and life stages, and how you can maximise any tax benefits inside and outside super.
How much it can cost
The cost of this more personalised advice depends on the fund and what you’re looking for. For example, UniSuper provides advice on contribution and investment strategies for $80 to $120. Comprehensive advice on retirement planning, non-super investment, debt management, personal insurance, government benefits and aged care costs $310 an hour.
Members of REI Super pay nothing for over-thephone advice on something like transferring super to a pension account or $495 for a face-to-face meeting with an adviser.
With Telstra Super, one-off advice can cost between $1000 and $2750 plus GST depending on the complexity, while ongoing advice costs between $1600 and $2100 a year.
Greater clarity for couples
If you and your spouse or partner are with different super funds, there is the possibility that speaking to your respective funds as individuals could result in conflicting advice, creating unnecessary confusion.
The solution, says the FPA’s Marisa Broome, is to seek advice together, as a couple, that covers your whole circumstances.
“It’s not just about your super,” she says. “You may have other investments, and in the de-accumulation phase you need to get advice together if you’re going to share your money in retirement.”
With some super funds, a first meeting with an adviser will cost nothing. Hostplus’s
Watson says: “For those seeking more comprehensive personal advice, including pre- and post-retirement planning, our members can initially meet with a Hostplus financial planner at no cost, and may elect not to proceed to receive a detailed statement of advice. For those that do, this service attracts a fee principally based on a professional hourly rate.”
The common thread is that the fees you pay for advice through super can be lower than those for seeking advice independently.
The Financial Planning Association cites research by Investment Trends, which shows you could be charged $2250 in upfront fees the first time you see a planner, though under-45s could pay half this amount as they tend to have less wealth and require less complex advice. Then, when you continue your relationship with a planner, the average ongoing advice fees are $3450 a year.
“All our superannuation advisers and financial planners are salaried and don’t charge ongoing fees or receive commissions,” says Watson. “So our members know that the advice they receive is given for their benefit only and in their best financial interests.”
If the advice you receive relates solely to your super (or insurance through super), the cost may be deducted from your super balance. This is something to discuss with your fund. Where it applies, it can mean you don’t have to dip into your wallet to pay for advice, but any withdrawal from your savings can impact your balance on retirement.
That said, Broome says super funds “are a great place for Australians to find comprehensive and episodic advice relevant to their super that helps them make decisions about how to save for retirement.”
How you can benefit
Financial advice may have its primary goal as boosting your financial wellbeing, but it can deliver benefits that go beyond dollars and cents.
Fidelity’s The Value of Advice report from 2019 found that among Australians who had received financial advice: •
89% say it has given them greater peace of mind financially. •
86.2% believe it has given them greater control over their financial situation. •
71% believe it has generated more value to them than it has cost. •
49.9% say their mental health has benefited.
Wait – it may be free
Before paying for advice, it’s worth checking what your fund offers. There is a lot of free information that may provide all the details you need. Watson says Hostplus provides a number of free webinars each month covering topics such as the basics of super, investing, risk versus return right through to transitioning to retirement. Hostplus also has Super Adviser, a digital advice service. Other funds, such as Aware Super, offer in-person seminars, which members can attend free of charge.
Broome says many larger funds also have mobile phone apps. “These can be so interactive,” she says. “They can send alerts on how the fund can help you through various life stages, so you don’t necessarily need to see a financial planner or speak to your fund.”
If you’re not sure what’s up for grabs, speak with your fund or set aside some time to really explore its website.
When to contact your fund
According to Broome, “the way people accumulate money in super is pretty much the same whether you’re 25 or 45. It’s when you reach, say, age 65 and you are de-accumulating from super that personalised information can be helpful.”
Lisa Judge, member advice and education manager at Active Super, agrees. “Regardless of demographic, all of our members have access to our advice service, and personal advice is not limited to superannuation.” However, she adds, “traditionally, Active Super members at the ‘pointy’ end of their retirement planning have sought personal advice on entering this phase of their lives as they start to unwind.”
Watson says Hostplus is seeing another trend. “We’re finding a lot of younger members are getting more involved in their super and broader financial wellbeing earlier in their working lives. This is something we greatly encourage and support. In our view and experience, it’s never too early, and you’re never too young, to get some ‘quick wins’ from taking guidance and advice, especially when it comes to your super and retirement.”
The main point, according to Broome, is that super funds offer a pathway to all levels of advice that can be useful from the start to the end of your super journey.
“Financial advice isn’t only talking to someone about complex tax planning or getting investment counsel,” says Rainmaker’s Alex Dunnin. “It could be as simple as checking that you’re using the fund properly, checking that you’re contributing the most money you can to your superannuation and doing it as efficiently as possible. It might involve reviewing your insurance deal.
“You may only need to read information on the website, watch an explanatory video or listen to a podcast. The big point is that super funds love to hear from their members and they want you to ask them questions. So take them up on their offer and try them out.” M
‘ Financial advice could be as simple as checking that you’re using the fund properly