The right advice at the right time can transform someone's standard of living in retirement. And superannuation funds are one of the main sources Australians look to for guidance. 

So, how do super funds answer the questions many members want to know, such as:

• Is my super invested in the best product/investment option for my needs?
• Is my disability insurance right for me?
• Should I be making extra contributions to my super?
• How much do I need to retire? 

We asked five people, a mix of CHOICE and Super Consumers Australia staffers and CHOICE members, to road test the 'free' personal advice offered by their super funds. We share their experiences below, and ask a couple of experts to weigh in on the funds' performance.

On this page:

• 1. Booking in for advice
• 2. Finding the right investment option 
• 3. Comparing fund performance
• 4. Advice on investment risk level
• 5. Advice on voluntary contributions
• 6. How much do you need to retire?
• 7. Getting advice on insurance
• How to use intra-fund advice

What is intra-fund advice?

Intra-fund advice aims to give people simple, personal advice about their balance and how it's invested. Although this advice is described as 'free', there is a levy on members of the super fund that pays for it, although you don't pay extra each time you use it.

Super funds have some boundaries when they give this type of 'intra-fund' advice:

• They only cover your super product and other products offered by the fund.
• They can't tell you to consolidate your superannuation accounts into one fund.
• They can only give advice to you, not your partner or household.

This means that most funds limit their advice to specific topics, such as additional contributions and insurance. So it's a limited offering, but designed this way for a good reason – it's intended to be simple and relatively cheap to provide.

1. Booking in for advice

Generally, to get intra-fund advice, you call or book online, and then talk to an adviser over the phone. After you talk to the adviser, you'll get a written summary of the conversation and any recommendations – this is called a Statement of Advice (SOA).

Four of our road-testers tried out the advice from one of Australia's biggest funds. 

The time between booking a session and talking to an adviser ranged from a couple of days to a week. The adviser told one road-tester upfront that they may need to book a second session to cover insurance as well as investment topics. 

Jerrod*, one of the road-testers, found booking an advice session complicated, as it was initially difficult to find the information on his fund's website. 

"Similarly, if you call them, it's not something they really advertise," he says. "It's not an option on their phone system – you have to go through to an operator and explicitly ask for the service. Once I got to an operator, it was relatively efficient, though, and they booked me in for an appointment within two days."

2. Finding the right investment option 

Joel was one two road-testers who wanted to know if they were in the best product for their circumstances (see also Alex's experience in 'Comparing fund performance', below). 

Joel's adviser told him he was in the fund's high-growth option. They took some personal data about his income, assets and debt, and then told him about the assets in the high-growth option. The adviser said the option was good because of Australia's current cost-of-living issues. They explained diversification and also economic cycles and recommended against switching in cycles.

It felt like I was deciding my own strategy rather than getting some clear guidance

The adviser then got Joel to undertake a risk profile. Joel found the questionnaire, which included a question on what he'd do if his investment dropped in value from an initial $1000 to $850 within 12 months, a little vague and leading: "It felt like I was deciding my own strategy rather than getting some clear guidance."

Joel's responses indicated he should stay in the high-growth option. 

Understanding that the adviser couldn't advise about other products, Joel was still keen to know about the returns of his fund's option and how it compared to others on the market. 

While his adviser said the fund was performing very strongly and was on point on fees, he could not suggest any useful resources and told Joel he'd have to Google it himself.

"I think it's good to encourage people not to attempt to time the market, and to hold during economic downturns," says Susan Thorp, professor of finance at University of Sydney. "But the approach to understanding risk aversion is usually quite muddled. Few funds do anything different."

As for Joel's difficulty in getting help to compare his fund with others, Thorp says: "This is where independent sources could help. I imagine the adviser is instructed not to give people access to comparisons."

"I think it's good to encourage people not to attempt to time the market, and to hold during economic downturns," says Susan Thorp, professor of finance at University of Sydney.

3. Comparing fund performance

Alex also asked his adviser how his fund compared to others, and how he could find out if it was performing well. 

The adviser directed Alex to a limited version of a commercial fund comparator that the fund provides for its members. This tool allows you to compare three funds at a time and offers a rating out of five on criteria like fees and investment performance. 

Alex said the tool wasn't what he was looking for. 

"I was more interested in dollar figures for fees and numbers on performance, which this tool didn't have. I also wanted to compare more than three funds at a time. It would have been useful to see all the comparable funds at once."

4. Advice on investment risk level

Road-tester Jerrod asked his fund which investment (or level of risk) would be best for his super. The adviser asked Jerrod a series of questions (a 'risk survey') to determine the level of investment risk right for his individual circumstances and goals. 

"I think it was broadly useful to get a sense of how much risk I was willing to take," Jerrod recalls. "[The adviser] also pointed out that if retirement isn't imminent, you can afford to take a higher level of risk than if you're retiring in a couple of years. He didn't really explain why this was in great detail – he didn't go into how you might adjust your portfolio after you've retired." 

He didn't really explain why ... in great detail

"A lot of [the advice] seemed to come down to my personal appetite for risk from my responses to the survey."

Jerrod's SOA recommended he move his investment from the fund's socially aware option to its balanced option. This may involve changing the level of risk in his investments, but, says Jerrod, the SOA "didn't really go into the reasons why" his adviser recommended this change.

"It seems that Jerrod wanted explanations for the advice," says Thorp. "The fund adviser should be able to explain his recommendations."

5. Advice on voluntary contributions

A common question you may want advice on is whether you should contribute more to your super fund. For many people, deciding whether to pay off the mortgage sooner or add more to their super is an important and complex issue.

Mary's experience

CHOICE member Mary sought advice on whether she should make voluntary contributions to her super. 

Mary is currently renting and wants to buy a property in the long term. The adviser asked her about her income and savings, marital status, how often she worked and whether she had private health insurance. 

She recalls volunteering the information that she was renting, but her adviser didn't go into detail on this point or consider how much she was paying in rent, her spending habits, debt, or whether she had any other needs.  

Mary's adviser didn't consider how much she was paying in rent, her spending habits, debt, or whether she had any other needs

Mary's adviser stressed that future governments might change the rules about super, potentially raising the retirement age or the age you can access your super. 

"He said [this future risk] was something for me to consider, but didn't say how I should consider it or the kind of impact that [it] might have on me," she says.

Mary's adviser also outlined how making additional contributions would have two positive impacts: it would increase her super balance, and it would reduce her taxable income. He encouraged her to get further advice to learn more about these benefits.

Ultimately, Mary found her adviser recommended she make additional contributions to her super without weighing up whether she should prioritise these contributions over other needs. 

The adviser emphasised the potential tax advantages of making voluntary contributions to her super. Overall, Mary felt the adviser didn't get a strong feel for her general financial circumstances and just asked her what she could afford to contribute.

Dr Shumi Akhtar, an associate professor at the University of Sydney Business School, says there were "many holes" in the intra-fund advice around voluntary contributions.

"It is highly inappropriate for financial advisers to recommend their client to make voluntary contributions into their super without knowing the full extent of an advisee's income and expenditure patterns and habits," she says. 

"The tax advantage cannot be the end game here."

Joel's experience

CHOICE member Joel also sought advice from his fund on whether to make voluntary contributions. Joel is currently paying off his mortgage. 

Joel's adviser asked some questions that Joel felt were relevant about his finances and whether he had any debt. But the adviser didn't go into any depth about his monthly expenses. 

"It was left for me to give a guesstimate on what I felt like I could afford," Joel recalls. 

Joel's guesstimate ended up being what the adviser recommended he contribute

This guesstimate ended up being what the adviser recommended Joel contribute.

The corresponding advice Joel received in his Statement of Advice didn't answer his question about whether making voluntary contributions or using this money to pay off debt would be better in the long term. Instead, it outlined how contributing to your super can be tax-effective.

Joel's Statement of Advice warned that Joel needed to consider whether the savings in interest on any debts could outweigh the benefits of super contributions. Joel says he sought an answer to this question from his fund and didn't feel like they supplied it.

Again, Akhtar says this advice is flawed. "Financial advisers shouldn't give advice based on clients' guesstimates. The pros and cons of additional contribution to super should be weighed up against the client's other priorities and needs."

6. How much do you need to retire?

Our research has found that this question is one of the most important for people planning for retirement. It can drive vital decisions such as how long you'll keep working and how much you'll save during your working life.

Alex asked his fund how much super he needed to retire. The adviser referred him to the ASFA Retirement Standard.

Created by an industry group, the ASFA Retirement Standard is a series of annual budgets for a single person or couple to enjoy a 'comfortable' or 'modest' retirement. It also estimates the amount of superannuation you need to achieve each income in retirement. 

The adviser said that, ultimately, the standard is a guideline and you need to make your own decisions on how much you want to spend in retirement. 

Our research has found that the question of how much you need to retire is one of the most important for people planning for retirement.

Alex's SOA noted he had indicated he wished to retire at 70 with a comfortable income according to the ASFA retirement standard. Saying Alex expressed a desire to spend the amount recommended by this standard seemed a stretch to him, given he had not indicated any familiarity with the standard.

After Mary asked about potentially making voluntary contributions, her adviser asked her how much she wanted to spend in retirement. He mentioned the ASFA standard as a guideline for spending at this stage of life. Mary say she was encouraged to use the ASFA standard even though she had "indicated wanting to spend less than the comfortable spending level". 

The independent policy think tank Grattan Institute has said the ASFA standard "isn't appropriate for most people" as it could drive over-saving during a person's working life to reach an unrealistic retirement income target.

7. Getting advice on insurance

Most super funds will automatically sign you up for death and disability insurance when you join the fund. This insurance in your super can help replace your income if you suffer an injury or illness that leaves you unable to work. 

Funds set the amount of disability insurance you'll get if you ever claim. You can pay more in premiums and be insured for a higher amount if you choose.

Joel asked his adviser how much disability and life insurance were right for his circumstances. 

His adviser first ran through each type of cover that the fund offers in quite good detail. The adviser then conducted a fact find that included debt, income and information about his partner. 

The adviser kept putting the onus onto Joel to work it out 

But when the conversation moved to working out what level of cover might be appropriate, the adviser kept putting the onus onto Joel to work it out. 

"I wanted to know what other people in my situation might be doing or what might be an appropriate level of cover for the amount of debt I had. But I kept getting stonewalled and had to guess."

In the end, Joel gave up on the process and the adviser stated that he might get more use from an online calculator. Joel's takeaway was that insurance was hard to work out. 

"There is tax, debt, health, underwriting, fees and definitions to think about on your own."

A research project commissioned by ASIC in 2020 found that members who sought advice on topics such as how much insurance they had experienced some difficulty getting satisfactory answers from their super fund.

How to use intra-fund advice

Super Consumers Australia policy manager Franco Morelli says that people interested in getting advice from their fund should be aware of its strengths and weaknesses.

"The strength of this advice is in explaining the fund's own products. Your fund should be able to outline the features of your product and give you some information on the other products the fund offers, including retirement products."

Any advice from the same company providing the product isn't independent. A fund will have the incentive to get you to stay, or contribute more to their product

Super Consumers Australia policy manager Franco Morelli

But as Morelli points out, a weakness of intra-fund advice is that it can't make comparisons with other funds and their products. 

"People looking for this information should be aware that they need to look elsewhere, like the government's free fund comparison tool."

"This advice also isn't designed to offer you comprehensive advice which is tailored to you and takes into account a complete view of your finances, circumstances and retirement goals. 

"Finally, be aware of the conflicts built into this type of advice. Any advice from the same company providing the product isn't independent. A fund will have the incentive to get you to stay, or contribute more to their product."

This content was produced by Super Consumers Australia which is an independent, nonprofit consumer organisation partnering with CHOICE to advance and protect the interests of people in the Australian superannuation system.

Stock images: Getty, unless otherwise stated.

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