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Financial advice remains an under-utilised tool in the member retention battle

Financial advice remains an under-utilised tool in the member retention battle

  • On 04/03/2015
  • superannuation

In the fight to engage and retain members, superannuation funds may deploy a number of strategies. But financial advice, a core offering for funds to service and engage fund members, remains under-developed. Rice Warner senior consultant Salvador Saiz has surveyed Australia’s 45 largest superannuation funds looking at opportunities to better incorporate financial advice offerings and to deepen relationships between a fund and its members.

Quality, appropriate and engaging financial advice is looming as one of the most crucial and necessary requirements for Australia’s largest superannuation funds. Once funds have established an efficient advice model, they must do more to communicate the existence of their offer and value to their member constituents.

Rice Warner’s recent survey of Australia’s 45 largest superannuation funds, by funds under management, shows that a majority of funds would benefit from reviewing their advice offering as part of a broader member engagement/retention analysis.

Some key findings of our report “Financial advice within Superannuation” include:

  • Fund members have low awareness and low use of advice services within superannuation funds.
  • A significant number of superannuation funds are now focusing on financial advice as a key member engagement and retention tool.
  • So, superannuation funds are reviewing advice models and seeking guidance on how best to structure and deliver that advice to members.

Ageing fund members approaching retirement typically require financial guidance, and will willingly seek it outside of their fund. Should the member go outside their fund for help, and approach their accountant, for example, he or she may end up exiting the fund in order to commence a self-managed super fund.

The current scenario?

Across the major funds, current advice models include any combination of in-house and outsourced advice services. These include fully in-housed to fully outsourced services, and all manner of variants in-between.

Though few are doing it, member directed online advice is a growing area of interest for funds and third-party advice providers.

Our report shows that Funds are now reviewing these models to determine the most appropriate combination in order to service and engage members, and allocating the most efficient use of resources.

In general terms the supply of quality financial advisers presents an issue: currently there are not enough financial planners in the industry to service a sudden spike in demand from funds for face-to-face advice.

Rice Warner sees a clear opportunity for superannuation funds to redouble their efforts in delivering quality financial advice that addresses the demands of these members. Better advised members are more likely to remain “sticky”. In other words, advised members are less likley to exit the fund.

Implementation of in-depth behavioural member segmentation would allow funds to better understand member preferences and assist in targeting and lifting member engagement.

– Salvador Saiz, Senior Consultant

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