Lifecycle cannot replace advice: Quadrant
Lifecycle options cannot overcome the difficulty of designing a "one-size-fits-all" MySuper product, according to Quadrant chief executive Wayne Davy.
Davy said lifecycle products would not get around the challenge of managing a pool of disengaged members' money because the transition to retirement was an individual scenario better served by affordable scaled advice.
"It all becomes pretty arbitrary as to when you transfer someone, and the global financial crisis has been the most classic example of all time. If you move someone just before or just after a massive meltdown in the markets, how do you explain that to members?" Davy said.
He said MySuper focused on low-cost product which might come at the expense of getting the best investment outcome, which required offering affordable scaled advice to members.
Davy said low financial literacy levels meant members were unaware of a "never-ending" list of wealth creation strategies.
Holistic advice did not make sense to all members, but scaled advice was an attempt to make the industry meet members' expectations, he said.
"At the end of the day, the individual has got to take carriage of it because it's their money. It's up to them what they want to do but we certainly encourage them to get involved," he said.
He said funds advice services needed to be affordable, "easy to deal with" and gain members' trust so that members could seek advice on their own terms, believing the fund would act in their best interests.
Education was key, according to Davy, and one of the things industry funds had "brought to the table by way of value proposition".
"They're not just there to make money for shareholders, they're there to help the members. You have got to get beside the member, that's really what it's all about," he said.
Davy said he expected future advice models to become more specialised to meet members' needs.
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