Super funds well-placed to fill advice gap as COVID-19 boosts demand

Financial advice
09 Dec 2020
7 min read

Financial advisers are exiting the industry in droves just as COVID-19 boosts the need for their services. Graham Eggins, UniSuper’s Acting Chief, Financial Advice, says superannuation funds with a strong brand, scale and advice capabilities are well-positioned to fill the gap.

The access and affordability of financial advice in Australia continues to be a challenge just as people are starting to need it – more than ever.

More than 4,000 financial advisers left the industry in 2019, representing a 15% reduction in the total workforce, according to a report by Adviser Ratings. The number of advisers is expected to slump another 36% to less than 15,000 over the next 5 years as educational requirements increase, major banks exit their wealth businesses, and commissions are removed or reduced.

A survey by the Profession of Independent Financial Advisers (PIFA) in June 2019 found close to two-thirds (62%) saw value in advice, however only 1 in 5 Australians seek professional financial advice. This presents an opportunity for businesses who provide quality advice. 

However, the need for financial advice is much more than a business opportunity. Research continues to link advice with better mental health. A survey conducted by global wealth manager Fidelity conducted in May, shows almost half of Australians have increased money worries as a result of COVID-19. The research found 53% of unadvised Australians worry about their money daily or weekly, however that falls to just 37% for those with advisers. And almost half (49%) of those without advisers said their mental health suffered as a result of the pandemic, versus 34% of those currently advised.

Demand is surging and there is more to come 

UniSuper has long believed that a central role of superannuation funds is to support members throughout their career, and during the ups and downs of the market and life. We have built one of the largest in-house adviser networks because we see a significant role for superannuation funds to fill the current advice gap. This has only become more evident and important in recent months as Australia navigates its first recession in almost 30 years, with many people (including our members working in the higher education and research sector) experiencing employment uncertainty, job loss, reduced hours, or lower investment income – all in addition to juggling the day-to-day uncertainty of a continuously evolving health pandemic. 

Adviser Ratings reports inquiries for financial advisers through its consumer platform tripled in the months following the COVID-19 outbreak, as people sought advice on managing their cashflow after suffering material drops in income or inquire about the early access to super scheme.

At UniSuper, after an initial lull as people adjusted to life in lockdown, advice inquiries have increased with conversations in recent months shifting toward concerns over job losses, reduced working hours and falling incomes, as measures taken by authorities to contain the virus have impacted the economy. Compared to the same time last year, Comprehensive Advice appointment bookings for July-August were up 8%.

It is not just retirees and near-retirees seeking advice either. 16% of our members that seek advice are under 35, representing an enduring market for financial advice in the future. Our younger members are largely engaging with us through our general advice service provided at the workplace with many moving into the scaled personal advice category in their late 30s and early 40s as super becomes a greater priority for them. Now, over 24% of members meeting with super consultants are under 35.

We expect demand among all members to accelerate as universities implement workforce planning measures later in the year and into next year, following the trend seen in other sectors including hospitality, retail and manufacturing.

The way we are engaging has also changed

The first stage of our response to the pandemic was to prepare our team to operate remotely. Our advisers transitioned from largely face-to-face member meetings to video and telephone meetings conducted from their homes, putting them in a strong position to meet member demand. 

Our advisers are also delivering seminars via webcasts, which have been well received and well attended. As restrictions are eased, we are unlikely to unwind all of the new digital capacity. We see that webcasts will play a critical role in reaching a large number of members as demand steps up, and as an avenue to cover topics which members may like anonymity or privacy for. Whilst we expect face-to-face meetings to continue to be the most popular meeting method, video is likely to remain an option we offer to members moving forward. 

A long-term opportunity for super 

The crisis has further highlighted the need for financial advice and shown we can deliver advice digitally.

Over the longer term, we expect both of these trends to continue. The investment UniSuper has made in our advice business has positioned us to meet the increased demand as advisers continue to leave the industry. Our footprint on university campuses ensures we remain present and easily accessible to members.

With a shrinking adviser workforce, super funds with a strong brand, scale and advice capabilities will be well positioned to deliver advice to an increasing number of members, particularly as demand for advice picks up in the coming years as the true flow-on effects of COVID-19 are felt.

 

This article originally appeared in the October 2020 edition of Superfunds magazine. It is re-published with permission.

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Graham Eggins
Acting Chief, Financial Advice
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