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.
Recommended for you
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
A $3.5 million settlement for victims of Melissa Caddick has been approved by the Federal Court following an initial agreement last December.
The Reserve Bank of Australia has delivered its first rate decision since the introduction of a new board structure last month.
Digital advice provider Otivo has launched an interactive tool, powered by artificial intelligence and Otivo’s own advice engine, to help answer client questions.