The amount of financial advice offered by super funds is set to mushroom if trends in United States are anything to go by.
Ray Martin, president of CitiStreet Advisors in the US, says less than 4 per cent of US employer sponsored funds offered financial advice five years ago. Today, 41 per cent of employers do offer it and around 82 per cent plan to in the future.
Martin says the delivery of advice by CitiStreet Advisors’ clients has more than doubled since last year. The rationale is that by offering advice, employers mitigate their risks of litigation.
At present, numerous class action cases against employers are underway dealing with the poor performance of company stocks and employers’ failure to provide employees with information about the benefits of diversification.
The number of members making use of the advice offered to them by CitiStreet Advisors ranges between 11 and 17 per cent, depending on the plan, and averages around 15 per cent. This average often jumps to about 26 per cent in the second year that advice is made available and to around 30 per cent in the third year.
Martin believes that members are probably in need of help more now than ever before. A recent retirement confidence survey in the US found that the number of people who are confident that they will have enough money saved for retirement has dropped. In addition, the percentage of people who calculate how much they need to save for retirement has fallen from 51 per cent in 2000 to around 37 per cent now.
“Its probably because they are afraid to open their statements and look at their numbers,” says Martin.
He adds that another reason why US employees need more financial help than before is because they are busier now and have less time to figure things out themselves as their employers work them harder in a tough cost cutting environment.
