Insignia embraces intra-fund advice to support underserved ‘middle Australians'

Technological advances and opening the advice arena to super funds, as recommended in the Quality of Advice Review (QAR) can help a largely underserved “middle Australian” population from falling through the cracks of financial advice, according to Insignia. 

Speaking in a panel on wealth trends and financial advice, Insignia chief executive, Renato Mota, highlighted there exists a spectrum of need for financial advice. 

“The challenge and the opportunity [here] is to serve ‘middle Australia’, for lack of a better term, but that offering must look very different to what the top 10 per cent receive or is offered to them,” he told audience members at the AFR Super & Wealth Summit.

“In the past, I think we’ve tried to shrink-wrap the offer to the top 10 per cent and serve middle Australia with a relatively similar offer [and] the opportunity ahead of us with the QAR and other things is in reinventing this offer.”

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One of the largely-discussed recommendations of the QAR has been opening advice to super funds in phase 2 of its recommendations in order to improve access to retirement income advice.

In engaging with industry on this front, Minister for Financial Services Stephen Jones previously at the same event that said super funds are “well‑suited” to safely meet the needs of their members.

In his keynote address at the summit, Jones elaborated: “The Retirement Income Review found that only a quarter of those approaching retirement seek financial advice. That means members are making big decisions about their future without access to helpful information, and it can lead to many retirees having a lower standard of living than they otherwise could have.”

Unlike the accumulation phase in which super fund members could manage limited engagement with their fund, the future is likely to require more meaningful interactions, he added.

Fellow panellist, AMP CEO, Alexis George, agreed there isn’t a ‘cookie-cutter’ approach to retirement, driving the need for advice based on personal circumstances. 

“[Australians] do need some help when it gets to retirement and unfortunately there’s no one cookie-cutter approach to retirement. Everyone’s in a different situation. They may still have outstanding loans, they might have a credit card bill, they may be separated from a partner, they may be divorced,” she said.

“There are different situations we need to negotiate, and in the current regulatory environment, it’s really difficult for us as a super fund to provide that assistance to those customers. I would always promote the benefits of financial advice, but it’s not for everyone and not everyone needs that, so I do think we need to take a hard look at how we can help that middle Australian.”

According to Insignia’s Mota, embracing intra-fund advice is an opportunity that Insignia would certainly promote as it ultimately results in benefitting ‘middle Australians’ who don’t currently receive any advice. 

“Like the minister has said before, in protecting people from bad advice, we’ve also protected them from good advice,” he said.

Drawing on the firm’s own experience with its super fund MLC Super, Mota highlighted how technology can be leveraged to service this segment given that, in the last 12 months, the super fund had witnessed an uptick of some 100 per cent in its digital statements of advice (SOA).

“The journey around robo and now generative AI in advice has been one of recognising it’s not about finding the right product for a client; it’s actually helping a client understand their situation and make decisions for themselves. What I call version one of robo was very much around a product solution i.e. how do we match the right client to the right product. 

“I think advice is going to be about a client solution, it involves a number of factors including product, but it’s actually about helping clients through their journey, their way,” Mota said.

He added: “Whether it’s inside super or outside super, leveraging technology to create new advice conversations, is the way we serve that middle Australia component that’s currently underserved.”