Following the fall out from the Royal Commission, the advice industry is changing, leaving many Aussies to miss out on financial advice altogether, an industry expert has suggested.
According to HLB Mann Judd’s head of wealth management, Michael Hutton, the superannuation funds could be forced to take up the slack left from the banks as the advice sector changes.
“People are needing good advice and they can’t really go to the bank for advice now. Everyone has a superannuation account, so I think there will be pressure on the superannuation funds to give advice,” Mr Hutton said.
However, the superannuation funds are limited - such advice would be one dimensional and superannuation-centric instead of focusing on all aspects of a consumer's circumstance.
“They're challenged, they have to be careful that they are only giving general advice and if they are giving personal advice they need to look into people's circumstances and to what extent are they going to be organised to do that,” Mr Hutton continued.
Technology the great hope
Mr Hutton believes while it has its limitations, technology can be the great hope for the advice sector: Robo advice could give investors access to the advice they need.
“Technology can be used to simplify and streamline the advice process,” Mr Hutton said.
However, the adviser did indicate that robo advice through superannuation might not be right for every individual's circumstance.
“When people are starting out for example young people, they should focus on wealth outside of superannuation,” Mr Hutton said.
The superannuation funds might give advice based around lowering tax through superannuation, which might be correct, but not right for the individual members due to life circumstances.
Mr Hutton also notes that general advice and having a plan might work for younger investors starting out, but older Australians are in need of more structured advice as they approach retirement.
“While automated might work for younger Australians, for people who need more structured advice robo might not be the solution”, Mr Hutton concluded.