Super funds have done a turnaround in a recent survey, with a rising number indicating that they believe members are responsible for their own financial education.
The Towers Perrin SuperPulse survey, which polled 12 of Australia’s largest super funds holding more than 168,000 members, shows trustees stepping back from active roles in member education.
While 62 per cent of respondents said the responsibility for financial education rests with the individual, a further 23 per cent said financial advisers paid for by the employee should be held accountable — again placing the end responsibility with the individual.
Less than half of the funds surveyed believe the fund is responsible — a significant change from last year when 88 per cent of respondents thought it very or somewhat important that trustees play an active role in educating members.
Towers Perrin principal Steve Schubert says the shift is consistent with the trend when the Government and employers expect more direct responsibility from individuals.
“With member investment choice being very common and the Government pushing on with choice-of-fund, the whole environment is yelling out loud and clear to people that ‘this is your savings, you decide what happens with it’.”
More than half of the funds surveyed said member interest in financial education had increased over the past two years, just under half said no change in interest had been noted, and none reported a decrease in interest.
But there’s still a long way to go before members are up to speed. Despite the increased interest, none of the respondents believed that their members were very knowledgeable about their retirement financial issues at this stage.
And while poor investment returns during 2002 probably prompted members to ask questions about their super savings, the subsequent changes to the regulatory environment also affected funds’ willingness to provide answers, with fiduciary and legal concerns about offering information and advice seen as the main barriers to providing education over the last year.
According to Schubert, while funds were previously optimistic about providing advice, financial services licensing and reform has forced people to consider what this means in practice.
“With the new licensing requirements, funds are worried about how involved they get in providing advice,” Schubert says. “Trustees are saying we can facilitate education, but we’re constrained. We’ll give you the tools, but you have to do the work.”
