Over each of the past three years, $35 billion has been switched between different superannuation products across Australia, and almost a third of it was done without professional advice. This recent finding from Roy Morgan shows that people either don't have the time to take advice or simply don't trust the intentions of those giving it.
The latter is somewhat easy to understand – we know that accountants, wealth managers and financial planners are sometimes incentivised to advise in a certain way. Either way, with so much on the line, it's usually best to get some form of guidance from someone you trust. So what's going wrong?
Where do people go for advice?
This particular study showed that the singular most common source of professional advice sought by people switching their superannuation was from financial planners or advisers. More than a quarter of people (26.9 per cent) looked to these professionals for guidance when switching their products, followed by:
- Their employer (18.2 per cent)
- Friends of family members (11.8 per cent)
- Accountants (8.2 per cent)
- Their financial institution (7.3 per cent)
And yet, far and away the biggest singular source of advice was their own judgement, with 31 per cent taking no professional guidance whatsoever. Those switching to an industry fund were even more likely to shun professional council – 37.2 per cent of them go it alone!
Advice: Do you need it?
The high annual fees charged for your super make it usually worthwhile to get some form of guidance so you have a best chance of not overspending. Choice found that the difference between the highest and lowest fees charged on a $200,000 super account is $3,780. Even for a $50,000 account, the gap was $945, which might be worth keeping in mind if you're looking for a change.
The difference between the highest and lowest fees charged on a $200,000 super account is $3,780.
Your adviser (whoever they are), should be able to guide you to a product that is not only cost-effective but also well-suited to your financial needs.
So sure: if you do your research, you can get the most out of wealth management, though if building the best nest egg is top of mind and you're not well-versed in superannuation, you may want to reach out to somebody you trust.
Going it alone
If you do decide to do it yourself, make sure you compare all the fees and expenses that come with maintaining your super. After all, you won't want your nest egg disturbed too much by people taking their own share of your savings.
Also look at how your superannuation candidates have performed over the long-term (five years or so). Your super is likely to be the longest savings method you ever partake in, so look for stability instead of funds that have had just one good year.
If you do need advice, you can always talk to CAPE. Being Customer-owned, its all about the customer, and you will get honest and straightforward advice – and no incentives paid.
