Superannuation funds need to effectively communicate information to their members about what financial advice entails in order to remove the key barriers to seeking advice.
This conclusion was drawn from a survey published by Professional Associations Super (PAS), which found that 67 per cent of respondents did not seek financial advice because they did not understand the types of advice on offer and the cost involved.
The chief executive officer of PAS, Megan Bolton, said the research revealed 57 per cent of respondents also cited low levels of trust as an obstacle to using a financial adviser, following negative returns and poor publicity during the global financial crisis.
"If funds are going to offer advice, they need to make it crystal clear what the service involves, what value it provides and what benefits members receive for the costs involved," Bolton said. "It needs to be as tangible as possible, without any smoke and mirrors to cause confusion."
The lack of knowledge surrounding advice has also resulted in a gap between its actual cost and what members believe is reasonable, according to PAS.
The survey found that there is a demand for financial advice among super fund members, as long as they understand the value proposition.
"The challenge for funds is communicating the availability of this service and delivering the advice in a direct, uncomplicated manner," Bolton said. "This needs to be a priority for fund providers if the service is to be a feasible and valued part of their offering."
