Super funds that step in to offer more financial advice to members are contemplating whether the new product offering could help to narrow the superannuation balance gap among male and female members.
The Quality of Advice Review (QAR) recommends removing red tape to allow them to provide more intra-fund advice, which some funds say could open the door to better financial outcomes for women.
The QAR recommendations come after the cost of financial advice soared 40 per cent in four years amid plummeting financial adviser numbers over the last decade.
Details on how funds that step in to offer financial advice will cover the costs is still being decided, though its likely to be far cheaper than the median $3,500 fee charged by financial planners.
Some funds wonder whether wading in to the financial advice space could help them achieve greater engagement with younger female members.
Other recommendations in the QAR, such as making statements of advice more succinct and communicating more effectively, could also help funds achieve greater engagement with female members.
The ASX’s latest Australian Investor Study shows women and younger Australians have lifted the number of adults who own investments to a record high of 10.2 million.
But when asked about the biggest challenges they face when investing, women pointed to issues around trust.
Thirty-eight per cent said they find it hard to know which information sources they can trust, and 20 per cent don’t know where to find the right information. And 12 per cent of women admitted they need professional advice but don’t know where to find it or are prohibited by costs.
Research by NGS Super also reveals that only a quarter of female millennials invest in their financial knowledge and close to 60 per cent aren’t confident in their financial future. Seventy per cent of members of NGS Super are women.
Natalie Previtera, CEO of NGS Super, the industry fund for teachers, says young women will be the biggest winners from the QAR. Women are more likely to shy away from financial advice because it’s complicated and perceived to be expensive, she says.
NGS research found that 77 per cent of millennial females said financial independence is important to them, but less than half are confident about their financial future.
The industry has a responsibility to ensure young women understand the value of advice, how easily to access it and how to apply it to their lives, she says.
“Of course, these recommended changes aren’t gender or age specific, but I believe the superannuation industry has an opportunity and responsibility to leverage this moment to engage more young women about the power of advice in securing their financial independence, especially when women are less likely to see advice,” she says.
Despite Australia’s superannuation gender gap being entrenched at 4.9 per cent ($3.4 billion), women are less likely to seek professional financial advice or even generally invest in their financial knowledge, Previtera says.
But being able to access advice via their super fund could see women – particularly younger women – gain better access to financial advice, improving their financial knowledge and position.
Super funds need to look at how to demystify superannuation for members and ‘lean in’ to changes that allow better access to advice for members. Personalised service and simplifying messages is a good start, she says.
“Consistency and simplicity in messages is crucial. Everyone wants to feel like they can understand the messages coming from their super fund, so it’s about making sure that the financial concepts are easy to digest so that members can more easily take action,” Previtera says.
Rest confirmed it had seen a sustained increase in demand for simple advice from young members, particularly young women over the past five years.
CEO Vicki Doyle agrees the proposed reforms could deliver advice to members who traditionally haven’t sought advice, particularly young members and women.
“We represent more than 1.9 million members, including around one million women and one million aged 30 or younger. Our members often have less complex advice needs, and would have no way to access simple advice if it wasn’t available through superannuation funds,” Doyle says.
Meanwhile, a study by Aware Super found that advised super fund members have an average of 22 per cent more funds in their super account. That translated to almost $150,000 in retirement savings for advised clients.