Australia is called the lucky country, and this may well be the case when it comes to our superannuation. The past and current governments have done a great job creating a massive savings pool to fund our retirement.
With every working Australian having a super account, outside of potentially owning their own home, this represents one of our biggest assets. For many, it will be the largest asset and the biggest determinant of financial wellbeing come retirement.
But with five million Aussies approaching retirement over the next 10 years, teamed with the cost of living and interest rates skyrocketing, peoples' super balances have taken a massive hit, and there is a pool of Aussies who don’t have long to make up for it.
It has never been a more important time for Australians to learn how to manage the accumulation and transition to retirement, and be able to sustainably provide income from their own super funds.
At Otivo, our data shows that those who get information, guidance or financial advice are better off when it comes to retirement - on average these Australians could see an extra $200k in their super account by the time they retire. At present, only 2% of member are receiving advice, leaving the majority in a challenging position - this therefore means currently 15.3 million Australians lack the appropriate support to navigate these important issues.
If Australians receive personal advice on making extra super contributions it could result in an extra $93 billion a year in super payments, the question is - how do super funds help more of their members so we can close that gap?
I believe the goal should be to enable any member of any super fund with access to more support - comprehensive and quality financial advice. From what we’ve found is that many Australians don’t treat their superannuation fund like they do their bank. They choose a fund and ‘set and forget’, some people who come to us don’t even know how much they have accumulated in their super account.
I’m passionate about providing accessible financial advice to all Australians and believe technology is the way to do that. Super funds have a real opportunity to help their members with just that - technology.
It’s important to note this isn’t intended to replace advisers - but rather to help everyone have access to a financial plan that reflects their personal situation. Getting started and educating Australians on financial literacy, and arming them with the tools to ask the right questions to their super funds.
Think of digital solutions as being part of an advice continuum. Imagine if every Australian had a financial plan. How much better off would they be, and how much better would the wider Australian economy be?
Super funds should be providing personalised advice to their members which is built around its member’s personal circumstances at any point in time, and can be adapted as life changes. It’s time for super funds to arm their members with the right information to grow their wealth by the time they retire.
Financial advice is more than advisers. It’s an ecosystem of support, guidance and advice through different delivery mechanisms and price points. This should not come at the expense of lowering consumer protection which both the super and advice industries have fought hard for over the past decade.
Digital advice can enable individuals to start the process of understanding their current situation, their goals and aspirations under the current and future regulatory environment. With that information provided, a digital advice solution can instantly answer the one question we all have about money - ‘what do I need to do next?’
Then as an individual or family situation becomes more complicated, they can reach out to advisers for more in depth advice. Advisers would then have more informed and financially healthy individuals to assist.
Super funds need to play a more active role in Australians’ lives to help them be better off, but super is not just about retirement. It can play a pivotal role in everyone’s financial lives while they are working.
So, if super funds are to play a role here, they will need a broader understanding of their members’ situation. After all, no one retires on their super fund alone. Super isn’t just about the member, it’s about their partner and their family - inclusive of other investments, the age pension and so on. All of these factors make a significant difference to a person’s retirement.
Fully compliant and automated online platforms that have Australians' wellbeing at the heart of what they do are the key to supporting 15.3 million Australians in their journey to being better off, and Australian super funds have a due diligence to support their members into a financially stable and supported future.
Paul Feeney is founder of Otivo.