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Over $35 billion in superannuation switched but nearly one third of switchers didn’t get any advice

Source: Roy Morgan Single Source (Australia) 3 years to November 2015. n=2,002.

In the three years to November 2015, the average amount of superannuation switched per year was over $35 billion — the result of 3.2% of superannuation products being switched annually. Of some concern however, given the dollars involved, is the fact that 31% of those switching didn’t receive any advice.

These are the latest findings from the Roy Morgan Single Source survey which included interviews with more than 100,000 people with superannuation over the last three years.


Financial planners/advisors the main source of advice

Just over one quarter (26.9%) of those switching their superannuation over the last three years got advice from a financial planner/advisor, 18.2% received advice from employer and 11.8% were advised by a friend or family.

Sources of advice when switching superannuation

Source: Roy Morgan Single Source (Australia) 3 years to November 2015. n=2,002.

Accountants were also an important source of advice (8.2%), which brings the combined use of professionals (ie planners/advisors or accountants) to 33%, after allowing for those using both. This is only just over the proportion of switchers who don’t get any advice (31%).


Those switching to an industry fund get the least advice

Of those switching to an industry fund, 37.2% didn’t get any advice, and only 15.8% got professional advice (planner/advisor or accountant). The main source of advice for this group was the employer (29.6%).

Sources of advice when switching to major superannuation types

Source: Roy Morgan Single Source (Australia) 3 years to November 2015. n=2,002.

Professional advisors played a much bigger role for those switching to a retail fund, advising 42%; although a still very high one in four (25.1%) didn’t receive any advice. Employers were only a source of advice for 13.5%, only slightly ahead of family/friend (9.8%). For those establishing a self-managed fund, three quarters (75.9%) got professional advice but 13.4% used friends/family and one in six claim to have received no advice.


Professional advisors focus on high-value customers

The average superannuation balance of those seeking professional advice was $233k, compared to $109k for those who received no advice and only $96k for those that got advice from their employer.

Amount in superannuation by source of switching advice

Source: Roy Morgan Single Source (Australia) 3 years to November 2015. n=2,002.

It is worth noting that the median value of those receiving professional advice is $104k, which shows that approximately only half of this group have a balance above $100k. This indicates that many of those not receiving any advice or just advice from their employer could benefit from professional advice, as around one quarter have balances over $100k.

Norman Morris, Industry Communications Director, Roy Morgan Research, says:

“Given the complex nature of superannuation, the lack of consumer engagement, poor understanding and low confidence in the system, it is vital that more people get advice when making decisions about switching their fund.

“Although advice is needed when switching superannuation, adverse publicity and the negative image of planners is potentially a barrier to more switchers choosing to use them. Issues relating to conflict of interest and professional qualifications of planners are likely to take some time to improve but the industry is taking measures to address perceptions in these areas.

“With over $35 billion in superannuation being switched every year, this represents a major opportunity for the industry. The challenge is to ensure that people switching their superannuation realise they’d generally be better off getting advice, and that they can feel confident in their advisor.”

For comments or more information please contact:
Norman Morris, Industry Communications Director
Office: +61 (03) 9224 5172
Norman.Morris@roymorgan.com


About Roy Morgan

Roy Morgan is the largest independent Australian research company, with offices throughout Australia, as well as in Indonesia, the United States and the United Kingdom. A full service research organisation specialising in omnibus and syndicated data, Roy Morgan has over 70 years’ experience in collecting objective, independent information on consumers.

Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size

Percentage Estimate

40%-60%

25% or 75%

10% or 90%

5% or 95%

1,000

±3.0

±2.7

±1.9

±1.3

5,000

±1.4

±1.2

±0.8

±0.6

7,500

±1.1

±1.0

±0.7

±0.5

10,000

±1.0

±0.9

±0.6

±0.4

20,000

±0.7

±0.6

±0.4

±0.3

50,000

±0.4

±0.4

±0.3

±0.2