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IFF/ISN Advice Research - Qualitative Research Findings, June
2009
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Detailed qualitative findings
•
All respondents who participated in the research were ‘main’ fund members of an IFF
Industry Fund.
•
There were three segment types explored in the quantitative research as follows:
•
•
Age based segments (members aged 20-29 years, 30-49 years and 50+ years). Most analyses were
undertaken at this segment level.
Engagement segments defined by the number of superannuation activities undertaken (i.e.,
consolidated super accounts, made additional contributions and made an investment choice) so that
the following groups were established: “Not engaged with super” (undertaken none of the
superannuation activities), “Somewhat engaged with super” (undertaken at least one superannuation
activity) and “Engaged with super” (undertaken more than one superannuation activity).
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Detailed Findings From Focus Groups
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Objectives and Methodology
Focus groups to examine industry fund member attitudes to financial advice
via their super provider.
The Industry Funds Forum (IFF) and Industry
Superannuation Network (ISN) commissioned
Forethought to conduct a research project to examine
industry super fund member attitudes to intra-fund advice.
Insight from the focus groups was used to design a
questionnaire for the subsequent quantitative research
phase.
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Focus groups
with IFF ‘main”
fund members
Young and Carefree
(aged 20-29, single with
no dependent children);
Couple / Single with
Dependents (aged 3049, dependent children
living at home and have a
mortgage); and
Mature Single / Couple
Empty Nesters (aged
50+, no dependents living
at home).
Specifically, objectives of the qualitative phase were to:
•
Explore member perceptions surrounding information and
advice regarding superannuation and member needs;
•
Identify triggers and barriers to seeking information and
advice including past behaviour (if anything) and
hypothetical advice scenarios;
•
Explore expectations with regards to advice (esp. source of
advice, channel, cost and payment method) and
expectations of implementation assistance;
•
•
Fieldwork
Duration
Understand how members judge the ‘quality and
professionalism’ of advisers, and views on adviser’s duties
and disclosure obligations particularly related to conflict of
interest; and
minutes.
In appreciation of
their time,
participants
received a $80
incentive.
Understand differences between member age / life-stage
segments.
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Overview of Key Findings
Summary of key findings from the qualitative focus groups discussing
member attitudes to financial advice via their super provider.
• Members in focus groups generally did not see the need for general financial advice when living day-to-day.
Advice was only seen as necessary when making a major financial decision, such as arranging a home loan
or investing a relatively large sum of money. However throughout discussions it became apparent that
participants were unclear as to the definition of professional qualified financial advice. Those participants
who were seeking what they deemed to be financial advice often consulted accountants or bank managers.
• Specifically for super, Young and Carefree participants felt that the time to access their super was ‘too far
away’ and therefore found it difficult to see the urgency or need for advice in this area. Participants in the
Couple / Single Dependents groups were generally not interested in seeking advice regarding their super as
they did not expect this to be their primary source of retirement income. In comparison, Empty Nesters
recognised the need for advice and were most concerned about the adequacy of their super as a primary
source of retirement income.
• Participants were unwilling to seek advice regarding their finances because they did not perceive the need
for advice. This was often due to participants’ sense of having matters ‘under control’ through existing
contact with an accountant or informal advice networks through family and friends. In some instances
participants believed that their wealth was not substantial enough for advice to be worthwhile or valuable.
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Overview of Key Findings
Summary of key findings from the qualitative focus groups discussing
member attitudes to financial advice via their super provider (cont’).
• Participants did not expect their super provider to provide financial advice as this was not considered to be a
part of the super fund’s offering to its members. Super providers were considered as sources of information
regarding super accounts, such as providing general account information to members but that it was not a
fund’s responsibility to advise members on actions to take regarding super or any other financial matters.
• Upon consideration, participants perceived that advice from a super provider would not be independent or
not as good as an independent adviser. They believed that an adviser affiliated with a super provider would
be more inclined to make super-related recommendations rather than provide a holistic view of their financial
situation. Also participants questioned the calibre of super-aligned advisers as they were not perceived to be
as highly-qualified as an ‘independent’ adviser.
• Across all groups, participants believed that the ‘value’ of financial advice was determined by the quality of
the advice in terms of the amount and level of detail provided, the personalisation of the advice, the monetary
value of the assets involved and the financial outcomes of the advice but generally found it difficult to
articulate this value as a monetary amount they would be willing to pay for advice. Preference for payment
methods differed between groups with younger members more inclined to opt for a deduction from their
balance and older members more likely to express interest in paying an upfront out-of-pocket fee.
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Profiling – Young and Carefree
The Young and Carefree group were starting to build their wealth.
Young and Carefree participants were aged
between 20 and 29 years of age, unmarried
and with no dependent children.
Average income was approximately $50,000
and most had investments including cash of
between $1,000 and $10,000. Most were
without a mortgage but had personal and
credit card debt of between $1,000 and
$10,000.
Young and Carefree participants were mostly focussed on
savings regarding their personal finances – this was
observed in both their discussion in the focus group, but
also when prompted to write down the areas of their
finances that were of highest interest (see below).
Less than half of participants had obtained
insurance (personal or property) or taken
action (via an additional contribution, fund
consolidation or investment choice) regarding
their super in the last 12 months. Most
reported some experience, or at least initial
contact with financial advice, via accountants,
banks and brokers.
Experience with licensed financial
planners was limited mainly to anecdotes
from older relatives or colleagues. However
“financial advice” could be obtained from
multiple specialised experts depending on the
nature of the investment or issue.
*This word cloud was generated using responses to the question “Which areas of your finances
are of the highest interest?” The font size of the word represents its frequency.
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Profiling – Couples / Singles with Dependents
Couples / Singles with Dependents were busy with everyday family and work
responsibilities and juggled competing priorities.
Couples / Singles with Dependents participants
were aged between 30 and 49 years of age,
married and with dependent children. Average
income was around $80,000.
Most had investments including cash of between
$50,000 and $100,000. Most had a mortgage of
around $200,000 with personal and credit card
debt of between $10,000 and $50,000.
In conversation in the focus group, Couples / Singles
with Dependents often discussed diverse and
competing priorities regarding their personal finances.
This was further reflected when prompted to report the
areas of their finance of highest interest (see below).
Approximately one-half of the participants had
obtained insurance (personal or property) or taken
action (via an additional contribution, fund
consolidation or investment choice) regarding their
super in the last 12 months.
Most had current contact with advice mainly via an
accountant. In the focus group, participants
typically understood “financial advice” to be
from any expert source (i.e., accountants, bank
managers) and not specific to licensed financial
planners.
*This word cloud was generated using responses to the question “Which areas of your
finances are of the highest interest?” The font size of the word represents its frequency.
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Profiling – Mature Couple / Single Empty Nesters
Mature Couple / Single Empty Nesters were aware of their need for
retirement advice.
Empty Nesters were aged over 50 years; most
were married with no dependents living at
home. Their average income was around
$50,000. Most also had investments including
cash of around $50,000.
When prompted before the focus group to list areas of
finances of the highest interest, super was top-of-mind for
Empty Nesters. This was evident throughout the session
as these participants often discussed how to understand
and maximise their super.
Most had no mortgage or a mortgage under
$200,000 with personal and credit card debt of
around $5,000. Most participants had obtained
insurance (personal or property) or taken
action (via an additional contribution, fund
consolidation or investment choice) regarding
their super in the last 12 months.
Most received financial advice from
organisations or individuals where there
was an existing long-term relationship. This
was typically via an accountant and bank while
some had sought financial advice via a
licensed financial planner. However,
misinformation and distrust of the financial
planning industry was rife unless a
personalised relationship existed or there had
been a positive word-of-mouth
recommendation.
*This word cloud was generated using responses to the question “Which areas of your finances
are of the highest interest?” The font size of the word represents its frequency.
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Usage and Attitudes towards Financial Advice
Younger participants exhibited an unwillingness to seek advice unless there
was a specific need relating to a large sum of money (i.e., home or business
loan).
All groups reported the first step when seeking
financial advice was to speak with family and
friends; this was particularly the case for the
Young and Carefree group.
The Couples / Singles with Dependents segment
approached accountants and the banks in
addition to approaching family and friends.
Accountants were trusted and the banks were seen
as having a wide range of relevant products that
could be bundled as required.
You go to people who you
can trust.”
Young and Carefree Participant
The Empty Nesters segment also reported that
accountants and/or friends were a first step for
advice. Most held accountants in high regard and
one participant explained that they are paid good
money for advice – particularly because a familiar
and personal relationship developed over time with
accountants.
The Young and Carefree segment agreed they would
not seek advice for financial situations that were
everyday occurrences. Instead advice was relevant
only in risky or complicated situations (i.e., a home or
business loan). The general perception was that
advice was beneficial only when savings or income
were high, with many participants saying they didn’t
“have enough money” to warrant advice.
Couples / Singles with Dependents generally indicated
that they did not need advice at their current life-stage
because they were settled into a financial routine
(typically this involved a focus on paying off a
mortgage and tax minimisation).
Empty Nesters said they did need advice in the shortterm and most had anecdotes of advice received
themselves or by colleagues / family. Most commonly
the group was seeking tax and investment advice to
plan for retirement and suggested that advice
would be considered from trustworthy sources
familiar with their situation.
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Experience with Financial Advisers
Most participants had approached financial advisers and had polarised
experiences.
The Young and Carefree participants who
had previously sought what they deemed to
be financial advice reported polarised
experiences (either very good or very bad).
These ‘advisers’ included accountants,
mortgage brokers and licensed financial
advisers. Some spoke highly of the service
received while others exhibited scepticism
and distrust as a result of their experience.
This scepticism and distrust stemmed
from perceptions that the ‘adviser’ had
put their own interests ahead of the
client’s interests.
Generally Couples / Singles with
Dependents reported negative experiences
with financial advisers whilst holding their
accountants in high regard. Most Couples /
Singles with Dependents were concerned
about adviser kickbacks and
commissions and felt that that the advice
offered was just one unsubstantiated
opinion that was difficult to validate.
Furthermore, a few stated they had been
personally uncomfortable with the adviser.
Participants reported difficulty in quantifying the value of
advice as they did not know how to assess what benefit
advice would offer. A few Couples / Singles with Dependents
stated they would see an adviser if they needed specific
advice regarding investments, property and planning for
retirement as these were likely to produce tangible
outcomes.
Most Empty Nesters had sought advice and reported negative
experiences with licensed financial advisers but good
experiences with accountants and lawyers. Negativity
regarding financial advisers stemmed from complicated
and confusing advice, poor investment performance and
hence perceived low value of advice and low levels of
personalisation. Irrespective of experience, Empty Nesters
expressed distrust for licensed financial planners. Perceptions
included that: they offered little value; frequently pushed
products that generated the best result for the adviser rather
than the client; provided generic, non-personalised advice; and
didn’t simplify information.
Several Empty Nesters agreed that investigating issues
and information personally was the best way to begin
when addressing a financial issue or question.
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Super Advice Scenario Responses – Financial Advice from a Superannuation Provider
Scenario prompting revealed each segment’s underlying attitude towards
Super Advice.
Picking the right super fund scenario: You start a new
job and your boss asks you for your super fund details. He
says you can join the fund they have set up at work or if you
have another fund you already belong to they can pay your
super there. What do you think is important in choosing
what super fund to join? How do you choose what to do?
Do you know what to do if you have more than one super
fund? Would you go for advice, or would you figure it out
yourself? If so where would you go? If not, why not?
The Young and Carefree group agreed that
consolidating multiple super accounts should occur
and that an industry super fund was where their
funds should be consolidated, for reasons of
simplicity and lower cost. Participants felt that
independent advice should be sought outside of the
super provider as this would yield unbiased advice
(i.e., not simply told to consolidate into the fund).
Alternately Couples / Singles with Dependents
reported that they would figure it out themselves.
Empty Nesters would also do the research
themselves and expressed regret that they had not
done so in the past. They would seek information
from the Internet and directly from super providers.
Investment option scenario: A friend at work has been getting
better investment returns than you but he is in the same super
fund as you, and you are worried that over time you may be much
worse off.
Young and Carefree participants agreed that they would
definitely seek advice on choosing an investment option,
but for initial information some would use the Internet to
find out about the different options. They knew that there
were different options but did not know how to switch
between them.
A participant from the Couples / Singles with
Dependents group stated she did not care enough
about super to seek advice and would make her own
investment decision, a minority in this group stated
that they would not be relying on their super
balance in retirement.
Empty Nesters stated they were unaware of which
option would be best for them and did not know how to
choose. Empty Nesters explained they would seek
advice from an independent person such as an
accountant or financial adviser to assist with seeking the
best investment option; obtaining advice from the super
provider was not mentioned.
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Super Advice Scenario Responses – Financial Advice from a Superannuation Provider
Each segment responded differently regarding a mortgage as a competing
financial priority to super and actions in response to receiving an inheritance.
Additional contributions vs. mortgage
payments: Some of my friends at work are salary
sacrificing extra contributions into their super so
they will have enough to live reasonable well in
retirement. I’m a bit worried because I haven’t
been doing this because I’ve been concentrating
on trying to reduce my big mortgage. You wonder
if maybe you should be putting more of your salary
into super, or paying off the mortgage.
All groups leaned towards paying off a
mortgage instead of contributing to
super. The Young and Carefree group
stated they did not have adequate
knowledge of this area to make their own
decisions and would seek advice from
independent advisers or banks/credit
unions.
Couples / Singles with Dependents
would approach their industry super
fund for advice if it was free to do so.
Otherwise, they would attempt to
understand it and take action themselves.
Empty Nesters would seek advice from
accountants initially and then a financial
adviser as a last resort, due to negative
sentiments towards financial advisers.
Lump sum of money from an Inheritance scenario: You recently
inherited $50,000 from the passing of a relative, what would you do in this
situation? Would you talk to anyone? Would you need advice on what to
do with the money?
Couples / Singles with Dependents participants considered
placing the additional funds into super. The Young and
Carefree segment were strongly opposed to investing the lump
sum in super because there were better investments for
their life-stage, had a fear of losing money and a lack of
knowledge around super. Empty Nesters considered
spending the lump sum as opposed to investing in super. Need
for advice in this instance was discussed in relation to tax
implications.
Not into Super
click to play
Young and
Carefree
Participant
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Super Advice Scenario Responses – Financial Advice from a Superannuation Provider
Responses revealed a reluctance to approach super providers for anything
more than information.
Insurance scenario: You work in a job with a high-risk for injury.
You’ve heard stories about people at work who have been injured and
not had enough insurance to get by after the accident.
The Young and Carefree group stated that they would get
advice concerning adequate insurance if they were in the
situation described in the scenario. They had little
knowledge about insurance in general or insurance through
their super provider. Furthermore, they were unsure of
where to go for the advice and information required.
Couples / Singles with Dependents knew they held
insurance through their super provider but were not
sure about the details of the insurance or if the cover
was adequate.
Will / Beneficiary scenario: The only assets my
wife and I have are the house which is in both
names and if one dies the other gets it and our
super. Do I need a Will if I have told my fund the
money should go to my wife should I die?
Participants from all segments stated that
they would seek advice from a solicitor
regarding Wills and super beneficiary
decisions. This was because they felt that
this scenario was clearly in the legal skill
set.
No participants mentioned approaching
their super provider for advice relating to
Wills or beneficiaries.
Empty Nesters knew very little about insurance through their
super provider – they were most likely to discuss going to
specialists for each area of advice discussed – i.e., an
insurance company for advice about insurance, a lawyer for
will / beneficiary advice, an account for general financial
advice or tax minimisations. They reported not knowing
enough about insurance from their super provider to make
decisions themselves.
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Attitudes to Superannuation and Advice via Super Providers
Unprompted, Young and Carefree participants suggested that super did not yet affect
them and did not enter into their finance considerations.
For the Young and Carefree group there were a number
of barriers to seeking financial advice in general as well
as specifically from super providers. These were mostly
related to their young age and perception that they did
not yet need expert advice on a range of financial
considerations. As participants were young and most
had low super balances they felt that advice was not
needed, particularly with regards to super-related
issues. The perception that they did not have enough
money to warrant advice largely meant that they did not
plan to seek financial advice unless it was in the context
of a considerable expenditure (i.e., planning to purchase
property or other investment).
When seeking insight into wider financial
dealings, participants suggested that
independent or more “holistic advisers” should
be sought out rather than a super provider. This
was driven by a perception that super
providers were not equipped to provide
personalised advice and would be unaware
of each member’s personal situation beyond
super.
Super Fund Advice Not Holistic
click to play
Participants in the Young and Carefree segment
discussed that there were better ways to use their
money than contributing to super. Current poor super
fund investment performance and low knowledge with
respect to super were also barriers to considering super
as the ‘best’ investment strategy. There was a general
consensus was that super was something that would
take care of itself over time.
Young and Carefree Participant
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Attitudes to Superannuation and Advice via Super Providers
Couples / Singles with Dependents suggested they were too busy to think
about super – it was not a high priority in their finance planning.
Generally the Couples / Singes with Dependents group reported negative experiences with seeking
professional financial advice when they did not use their accountant. Most participants were concerned that
advice from an individual was just one opinion, while some stated they felt uncomfortable with advisers
personally. Additionally participants agreed they were concerned about ‘kickbacks’, commissions and
the ‘independence’ of the advice received.
Participants generally agreed that they did not currently need financial advice because they were settled and
focused on paying off their mortgage. When discussing advice specifically related to super, some participants
stated they did not care enough about super to seek advice because they would not be relying on their
super balance in retirement and they did not have enough super to warrant the attention. When
prompted directly, the group reported that they would be unlikely to approach their super provider for advice.
Some participants stated that did not trust the “whole super
set up” or the quality of advisers associated with super
providers. Others were comfortable with a ‘set and forget’
strategy to manage their super or expressed concern that super
legislation changed so often that there was no point in asking for
advice until nearing retirement.
Super Fund Adviser Not as Good
click to play
While a few participants stated they would seek advice if they
had specific issues around investments, property or planning for
retirement, super providers were not considered as sources for
advice. Couples / Singles with Dependents indicated that
their willingness to seek general financial advice may
increase as a result of injury, separation, redundancy or
having children.
Couples/Singles with Dependents
Participant
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Attitudes to Superannuation and Advice via Super Providers
Empty Nesters knew they required financial advice and their personal
experiences suggested they should seek out specialists in each area of advice.
Participants from the Empty Nesters focus group
held distrust for financial planners, explaining that
they offered little value, frequently pushed clients into
products that generated the highest commissions for
advisers, provided generic advice and did not simplify
issues as they should. Participants expressed frustration
in their interaction with financial organisations, stating
that they were shuffled from person to person.
Participants reported a low likelihood to seek holistic
advice from a super provider because of a perception
that the aligned adviser would advise to invest
everything in super. However, participants were
amenable to investment choice advice within super.
Participants seemed more amenable to having a
number of experts who gave specific advice in their
area of expertise rather than a single adviser who
looked after a diverse and comprehensive range of
financial issues. Participants did not think that super
providers had specialists capable of offering advice
on all the relevant issues normally considered.
All Empty Nesters believed that they needed
financial advice at their current life-stage. Most
commonly they had sought tax and investment
advice when they found they didn’t have the
knowledge or confidence to take action
themselves. Some also commented that they
needed advice regarding retirement planning. In
particular they wanted advice around super
projections, where their super was invested
and to be assured that adequate measures were
being taken to protect their super balance.
Why Not Go to Your Super Fund?
click to play
Furthermore, Empty Nesters preferred to speak with a
person who already knew their situation rather than an
organisation that did not know them.
Empty Nester Participant
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Attitudes to Financial Advisers
Participants agreed that financial advisers needed to build a relationship with
their clients, establish trust and prove value.
Young and Carefree participants agreed that
confidence in adviser independence was important
and that advisers needed to speak in a language
they understood. Furthermore, they expected that
advisers would take individual client situations into
account to tailor advice to each client’s requirements.
The Young and Carefree group understood that
advisers received trailed commissions and suggested
that advisers should disclose this before giving
advice. However if an adviser received
commissions it did not mean that Young and
Carefrees would refuse to accept advice from
them.
Couples / Singles with Dependents reported that a
good adviser was judged by a proven track record
with satisfied clients and positive word-of-mouth.
One participant stated that she would trust advisers
from big firms more since they would have ‘backing’
(and this was considered to be more secure).
Empty Nesters agreed that a good adviser would
inform clients about their qualifications, tailor
advice and explain any hidden charges.
Just because an adviser is aligned with
a product does not necessarily mean
that it is a bad product.”
Young and Carefree Participant
Couples / Singles with Dependents and Empty
Nesters reported that it would be good for advisers to
be honest and notify clients upfront about trailing
commissions. In particular, Empty Nesters
described this as ‘refreshing’. However some
participants in both groups said they would not do
business with advisers who received commissions.
One Empty Nester said commissions should be
illegal because they had resulted in so much bad
advice.
The Young and Carefree response to benefit
projection was overwhelmingly positive, nearly all
participants felt it would help them understand their
super better. Couples / Singles with Dependents liked
the idea of projections (with caution about how reliable
the projections could be). Most Empty Nesters were
interested but current financial turmoil was cited as
an example of why projections could be unreliable
and useless over the long-term.
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Attitudes to a Financial Advice Product
High service expectations and unwillingness to pay for advice stemmed from
perceptions that all super providers benefitted from members.
All segments strongly stated that personalised in-depth advice must be conducted face-to-face for
reasons of personal interaction, rapport building and the ability for documents to be used at the
meeting. The clear indication was that face-to-face was more valuable and participants would be unlikely to
pay for advice delivered by telephone or email. Meeting with one adviser meant individualised attention,
effectively making that initial contact their ‘one-stop shop’ for advice. This approach was perceived as
personalised and trustworthy.
Non face-to-face channels were only acceptable for free, simple information provision (i.e., details of
amount of insurance needed or features of investment options). All segments preferred information, as
opposed to advice, to be delivered over the phone.
Participants from all segments found it extremely difficult to put a price on advice and implementation.
Willingness to pay depended on the level of detail and personalisation, value of assets involved,
quality of advice and the outcomes of the advice received.
Advice One Stop Shop
Couples / Singles with Dependents stated amounts ranging
from $50 an hour if receiving advice from an industry super
provider to $100 an hour for a non-aligned adviser. Empty
Nester responses included no more than $250 an hour and
$1000 for consolidation of 10 funds.
click to play
After specific prompting and information given by the
moderator regarding the low fees (they were informed fees
were around a $1 a week) and ‘all profits to members’ ethos of
industry funds, all segments were still hesitant to provide a
realistic or consistent price for advice. Many participants
expressed that advice from industry funds should be free as
they were personally already members.
Empty Nester Participant
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Attitudes to a Financial Advice Product
Allowing members to choose how they approach and pay for a super advice
service is critical.
The Young and Carefree group preferred advice fees
to be taken directly out of their super fund. This was
much more appealing than having to pay out of pocket
as there appeared to be a lack of connection to their
super balance. They had a preference for a fixed
upfront advice fee taken out of super as this was
more certain in comparison to an hourly rate.
The Couples / Singles with Dependents consensus
was for upfront, out-of-pocket payment for advice. They
stated this method meant knowing ‘where you stood’
straight away and were not interested in having
their super accounts debited. Empty Nesters stated
that a separately charged fee would be preferable to an
amount deducted from their account.
When the idea of an outbound call from their super
provider was first introduced, participants from the
Young and Carefree segment had mixed responses to
the service. There was a general feeling of scepticism
and concern over the convenience of the concept.
Some thought it was a good idea because without the
call they would be unlikely to seek out the
information or advice themselves. An outbound call
appealed more to older segments, providing the call
could be rescheduled if initially made at an
inconvenient time.
Personally emailing members was raised as an
option and some participants had positive
experiences with this method, having received
email communications from other organisations.
Response from the Couples / Singles with
Dependents was mixed – some thought it would
be time-saving to speak over the phone while
others thought that an email would be more
convenient.
I would not phone my Super Fund
click to play
Couples/Singles with Dependents Participant
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