Funds need to increase client understanding of superannuation to ensure they are prepared as they approach retirement, according to REST.
Research from the industry super fund found that less than half of people approaching retirement had a good grasp on how much they had saved in their super funds, or took an active interest in building their wealth.
“The financial services industry doesn’t necessarily make it easy for people to understand superannuation, and so they’re having difficulty working out what they need to retire on,” REST chief executive Damian Hill told Investor Weekly.
“We concentrate on the lump sum they have available and so I think we need to change the conversation to be focused on income, rather than just that lump sum.”
The research also found that 70 per cent of Australian baby boomers had not sought financial advice to inform of their retirement plans, with many citing service cost as a leading factor.
REST said the Future of Financial Advice (FOFA) reforms, which will be become mandatory as of 1 July this year, may help change the view of financial services by this age demographic.
“Limited advice should bring the financial barrier down for many people, and the banning of commissions should mean that people are paid for the advice rather than the product,” Mr Hill said.
“My hope would be that people start to understand the benefit of advice and, over time, that would lead more of them to seek fuller, holistic advice, which may well be necessary for retirees.”
