Monday, 28 November 2022
New research undertaken by Aware Super has provided the clearest picture yet of the value of financial advice for Australians saving for their retirement.
Detailed analysis of more than 100,000 members of the Aware Super fund compared the retirement savings and behaviours of members who had received comprehensive financial advice from Aware against comparable members who had not.
The results indicate that for the study cohort, members who received financial advice had an average of 22% more funds in their super account. That translated to almost $150,000 more in retirement savings for advised clients.
Aware Super’s Chief Executive Officer, Deanne Stewart, said the research demonstrated the critical role advice played in helping Australians achieve their best possible retirement outcomes, at the same time as providing the fund with invaluable insights to inform the design of its financial advice, education and guidance services.
”Aware Super believes wholeheartedly in the value that high-quality financial advice can deliver to all Australians,” said Ms Stewart.
”In addition to comprehensive financial advice and retirement planning, we also know that there’s an unmet demand for personalised help among members of all super funds – advice that’s incredibly valuable to the member, but not necessarily in the same realm as whole-of-life financial planning.
”We’ve known through our Voice of Customer research for a long time that advised members report feeling greater confidence about their financial future, feel that they have more retirement options, and generally feel more informed about their finances.
”This new research has been an invaluable step forward in using data to firstly help establish a baseline for what value our members can realise from taking financial advice, and then looking at how we can maximise access to advice services in a way that helps our members create their best possible retirement outcomes.”
In addition to the significantly greater superannuation account balances enjoyed by advised members, the study also identified:
- Advised members in retirement were able to withdraw their funds at a 33% higher drawdown amount, on average
- Advised members recorded nearly 2.5x greater voluntary, tax-efficient contributions of nonadvised members
- Advised members consolidated twice the average amount of superannuation from other accounts, compared with non-advised members. Consolidating super accounts to the fund best suited to members can help them simplify their finances and avoid paying multiple sets of fees.
The study also analysed several advice-seeking behaviours, including the growth of ”single topic” advice, an area in which Ms Stewart says the financial advice market is dramatically underserved.
”We’re expecting to see significant growth in demand for single-topic advice – things like members receiving an inheritance and wanting some tailored personalised advice about what to do with it, but not necessarily being in a position to want or need a more comprehensive conversation about their circumstances at that time,” said Ms Stewart.
”We think this is incredibly fertile ground for innovations in digital advice, for example, where we can see a cohort of thousands of potential clients who all have unique circumstances, but some common advice needs that could be really efficiently served through a digital solution.
”One of our key pieces of feedback to the government’s Quality of Advice Review was that it’s vital we increase the quantity of help, guidance and advice that can be provided to Australians. But under the current advice regime it simply wouldn’t be possible to provide – or for individuals to afford – all of the advice that Australian consumers require.
”Our hope is that through research like that which we’re now undertaking, we can provide meaningful insights to show the benefits of financial advice in helping members achieve better retirement outcomes. From a fund perspective, those insights can also inform the design of affordable and accessible advice, help and guidance solutions to help more Australians.”