The Superannuation advice conundrum
In 2020, to support Australians during the Covid-19 pandemic, the Australian government allowed early release of Superannuation for the first time. This action inspired millions of Australians to think about their Superannuation – how much they have, how it grows, who manages it and what it can do for them now and in retirement.
This new interest led to Australians wanting to get advice about how to get their Superannuation working at it best. To better understand their situation, many Superannuation members looked for a Financial Adviser. Notably, a 2020 CFA Institute study showed that 81% of Australians prefer to get advice from a human adviser who can talk them through goals and strategies.
Unfortunately, as the government continues to increase the costs of running Financial Advisory services, the number of registered financial Advisers has and is continuing to drop. According to Rainmaker Information's Financial Adviser Report, Financial Adviser numbers have decreased 16% through the 12 months to June 2020 to reach just 22,334.
During the June quarter alone, 1460 Advisers ceased registration. "This is the seventh consecutive quarter of decreasing financial adviser numbers, bringing the size of the industry back to June 2016 numbers."
The lack of Financial Advisory services in a time of uncertainty and unprecedented consumer interest is distressing for superannuation members. With 75% of Australian households having inadequate savings to cover unexpected events, the most families are willing to pay for comprehensive advice is $550. This is almost a third of the average amount Advisers are currently charging for limited advice, in a business environment which is not working in their favour, despite the obvious need for their services.