Lifebroker: Why Explaining The Rules of Superannuation Can Help You

Clients rely on us, their insurance brokers, for reliable financial information. According to a recent report by Mercer, most clients are sorely lacking in information in the realm of superannuation funds. This low level of financial literacy can be traced to the fact that clients have very little idea of what benefits or level of insurance cover is best for their particular financial scenario. The paper "Financial Advice: Risky Business or Critical Growth Engine?" explores how to convey this potentially complicated information in the clearest and most beneficial way possible.

Many fund members hesitate to hire financial experts to explain the benefits of their fund to them. However, as insurance brokers we can provide our current and future clients with an invaluable financial boost by clearly explaining the benefits of these funds. We should consider a straightforward strategy when explaining what our clients can expect to receive and how they should interact with their superannuation fund. The idea of "scaled" advice is particularly popular. According to a paper authored by the Australian Securities and Investments Commission, 80% of members appreciate scaled advice when making decisions concerning the future of their insurance policies.

Breaking down advice into a simple and straightforward format also has benefits for the membership rates of the funds themselves. Members don't appreciate being kept in the dark or made to feel that they don't have the necessary intellectual prowess to participate fully in the benefits of their fund. This leads to a lower participation rate as members seek out other funds or other financial experts who will allow them to better understand how to fulfil their various insurance needs.

Of course, some in our industry may have concerns about the impact of different regulatory requirements on the specific type of advice they can give to their clients. Unfortunately, while understanding the full list of rules can be complicated, clients are not particularly interested in being told that they can't have their questions answered because of an arcane regulatory policy. Understandably, clients want answers to their questions. They feel that they are entitled to an explanation of the services offered by their insurance provider, even if that explanation is limited by the regulations of the industry.

Those of us who are able to provide simple yet sound advice without neglecting industry regulations will experience a considerable boost in our overall client roster. This strategy helps fund members and brokers alike.