Advice gap could see retirees fleeing
There is a substantial advice capability gap in many industry superannuation funds compared to their retail counterparts, which puts them at risk of losing members at the crucial point of retirement, Tria Investment Partners said.
Tria principal consultant, Chris Hurst, said there are already indications that funds with a significant network of advisers were pulling in larger number of retirees, while those with weak advice networks struggled to keep members.
Tria figures indicated a strong connection between the scale of a fund's salaried and aligned planner force and the breadth of its pension division, with retailers holding more than 20 per cent of their assets in pension mode.
"For many funds, the lack of an adequate advice proposition requires an urgent response," Hurst said.
Tria figures also showed the number of fund members per aligned adviser within large industry funds were substantially higher than within their retail equivalents.
While this overlooked the independent financial adviser networks, it was still indicative of the substantial gap between industry and retail funds.
"However, they are not alone. Most advisers have less than 250 active clients, so even the retail sector with its much larger aligned adviser forces and supportive IFA networks is under pressure," Hurst said.
Industry funds were still ahead on market share in workplace super from retail funds, with retail funds falling over minus six per cent over the last 10 years, while industry funds gained just over five per cent.
"However with the forces we've outlined above, without any type of response it's only be a matter of time before we start to see a significant shift in the competitive landscape," Hurst said.
AUTHOR
Malavika Santhebennur
Recommended for you
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
New Zealand’s financial regulator is following the footsteps of its Tasman neighbours and proposing to conduct a review on improving the accessibility of financial advice and advice business models.
