Orphaned clients seeking help from super funds

The effects of the adviser exodus are coming to the fore with a panel of super fund trustees stating they have noticed more members having lost touch with their adviser and seeking advice from their funds.

Speaking at the Association of Superannuation Funds Australia (ASFA) conference in Brisbane, representatives from HESTA and Colonial First State discussed super funds providing advice to their members.

Kelly Power, chief executive of Colonial First State, said: “What we’ve seen in terms of trends is that with the cost of advice going up with fewer planners in the industry, you’re starting to see people who were typically in an advice relationship or who were introduced to us through an adviser no longer have that relationship. 

“So 40% of our assets are in decumulation and they’ve received advice at one point in time but as they’ve got older, they no longer have access to those advisers, they have lost touch and are looking to Colonial First State for that support.”

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This presented a challenge for super funds, she said, to avoid falling into giving full advice.

“It’s really tough to do that digitally, in my opinion, as the pre-retirement needs are very bespoke, it’s not homogenous. It’s quite challenging not to move into full advice conversation.

“You can start with things like risk profiling tools or simple intra-fund advice which will service a particular part of membership. But when you bring things like longevity risk and dependents into the conversation, it becomes much more complex discussion.”

Joshua Parisotto, chief advice officer at HESTA, said the fund had partnered with external firms to offer advice to members and around 10,000 HESTA members each year received external financial advice. 

“Advice via our internal intra-fund license which provides advice on retirement income streams has doubled year-on-year for the past three years but there is only so many people and so many humans when you have a retraction in the number of advisers.

“The digital advice component becomes extremely important, there is demand there, how are we triaging to get people the appropriate advice. So I think digital will be there as part of the future and it will become more present.

“But we need to balance when does a human become appropriate. When it gets to the paperwork or the Statement of Advice stage, they want to talk to someone, you can’t yell at an algorithm but you can yell at a person.”