Working as a Team

An Adviser Capability Model

Superannuation funds are quickly becoming the most important service providers for Australian households, surpassing traditional banks. As the trusted custodians of Australia's growing retirement savings pool, they play a crucial role in ensuring Australians can retire with dignity. To succeed in this role, however, they will need support. Super funds must take on a leadership role, bringing together a team of service providers to support the retirement needs of everyday Australians—with advisers at the core of this team.

Everyday Australians and governments are increasingly relying on the superannuation system to secure their financial futures. For individuals, this translates to a stable income and a dignified retirement. For governments, it means maintaining political stability, achieving budget surpluses, and balancing tax receipts with social security payments. It's clear that getting this right is essential for everyone involved.

To ensure success, we need a collaborative approach that involves all stakeholders. While super funds will inevitably bear much of the responsibility, this burden can be lightened through partnerships and cooperation. In my view, two key pieces of legislation will bring super funds and advisers together to achieve Australia’s retirement goals:

• Best Financial Interest Duty (BFID):?The BFID clarifies trustee obligations to ensure costs align with members' best financial interests. This increased scrutiny will particularly impact in-house comprehensive advice teams. Unlike limited scope advice (such as digital or phone-based advice), comprehensive advice is less scalable and presents more challenges in fitting within the BFID framework due to its broader scope and geographic reach.
• Retirement Income Covenant (RIC):?Part of the SIS Act, the RIC requires super funds to deliver a clear retirement income strategy that maximises retirees' income, manages potential risks, and offers flexible retirement options. This is further complicated by the introduction of longevity products, which are more effective when accompanied by sound financial advice.

The conclusion is clear: super funds will need to work more closely with advisers to meet the expectations of regulators, the government, and the community. Fortunately, in the past five years, I’ve observed a genuine and sustained effort by many super funds to enhance their adviser capabilities. From my experience with these progressive funds, I've identified five key capabilities that contribute to their success. Success, in this context, is measured by overall member retention—particularly the retention of members at the point of retirement. The more mature the adviser model, the higher the retention rate.

In this series, I will explore each of these five capabilities and their maturity levels, culminating in an Adviser Capability Model. This model will provide a framework for measuring how well a fund is developing a collaborative advice model for its members. The five capabilities are:

1. Advice Strategy:?How well the advice strategy is embedded into the fund’s culture and leadership.
2. Data:?The accessibility and relevance of data for advisers to generate compliant advice.
3. Adviser Efficiency:?The digitisation and streamlining of processes to make it easier for advisers to collaborate with the fund.
4. Relationship and Communication:?Building and maintaining strong relationships with advisers to support member needs.
5. Member Outcomes:?Recognizing that the quality of retirement outcomes is linked to members’ access to appropriate advice and guidance.

Super funds that strike the right balance between in-house advice and collaborative partnerships with advisers will ultimately improve outcomes for their members and the communities they serve.

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