Financial advice revolution underway

Financial advice revolution underway

Financial advice revolution underway as more members engage with their super

  • 2 August 2012
  • Australia, Melbourne

Super fund members who receive advice from their fund are twice as likely to make additional contributions and have higher overall average contributions, Mercer will tell the Financial Services Council conference today.

Jo-Anne Bloch, Mercer’s Financial Advice Business Leader, said the financial advice revolution is well underway in the superannuation sector.

“Mercer’s analysis of member activity shows that individuals who access simple advice are more likely to take subsequent steps to boost their retirement savings.

“Our findings prove what we know intuitively: when members are shown the benefits of advice that they can understand and that is relevant to their needs, they are much more likely to take positive steps to boost their savings and protect their wealth.

“Therefore, making simple advice accessible and cost-effective is one of the most powerful tools we have, as an industry, to increase member engagement and maximise Australians’ retirement savings,” Ms Bloch said.

Mercer continuously tracks members' activity after they receive general or limited advice in the workplace or over the phone, and compares this to a group of members with similar characteristics who have not accessed advice. Analysis of the data reveals that members who access limited or general advice are:

  • twice as likely to make additional contributions and have higher average contributions;
  • twice as likely to make a beneficiary update;
  • five times more likely to make an insurance underwriting enquiry; and
  • three times more likely to make an investment switch (noting that often the advice given is to recommend not switching).

Ms Bloch said demand for advice from a range of Mercer channels continues to be strong, with its phone advice channel experiencing a 27% increase in the number of ‘statements of advice’ provided, since the same time last year.

“In 2011 Mercer provided general and simple personal advice to 20,000 members in the workplace and over the phone. To increase the scope of this advice and make it easier for members to access, we have broadened our offering this year by providing simple advice in members' workplaces,” she said.

Using Decimal software which is integrated with our own systems to pre-populate member information, advisers working remotely from a member’s workplace can access account details, undertake a limited financial planning process and produce a statement of advice in less than half an hour. Advisers can also generate a Statement of Advice on the spot if warranted.

Mercer says its findings highlight the importance of offering innovative advice services for members and argues such services are achievable for super funds of all sizes, whether they outsource to a third-party licensee or provide accessible programs in-house.

“Funds who don’t have the scale or resources to offer simple advice are increasingly looking at ways to outsource. We expect this number to keep on growing because whilst financial advice is seen as important, it is a highly regulated sector and the compliance framework can be hard to build and manage.” Ms Bloch said.

About Mercer

Mercer is a global leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 55,000 employees worldwide and annual revenue exceeding $12 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. Follow Mercer on Twitter @MercerAU @MercerInsights