Retirement income products should not need advice: panel

Products created under the retirement income covenant should not require financial advice as it will not be sustainable or scalable, according to a panel.

Speaking on the CEPAR Pensions and Retirement Research colloquium, Cbus group executive – brand, engagement, advocacy and product, Robbie Campo said it was not sustainable or scalable at an individual or system level to build strategies that relied on every single individual member in the system that sought personal advice to be guided into making a selection.

“In my mind, it's something more like an advance calculator or a version of a retirement income estimate that can match members' circumstances to the types of products that will support them,” Campo said.

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“From an individual product provider perspective the way we engage with that kind of strategic advice, we'll probably be constrained by the strategies and products that we offer. So, there's quite a lot of complexity.

“I think it will be like what we've done with retirement income estimates but with some guardrails and limitations or guidance about what is okay to say. We can create some templated versions of guidance and nudging that will be much better than what we have currently.”

Also on the panel, Challenger retirement income chair, Jeremy Cooper, said the products would need to be close to being a default

“If it's not actually default, it'll feel like it and that is the sort of state that we need to get to, in my view. I think we're finding our way here, but I think Robbie's point about personal advice, the sheer scale of some of the member cohorts that are moving towards and into retirement are simply too large to expect that,” Cooper said.

“So, I think over time as we get to know and love these products we will be much more comfortable about them being soft default – effectively a default product.

“The trusted brand, or the fund says 'look, we've got a sufficient amount of data for you, we've got data from you for the last X decades, here is our retirement offering’. It'll be as simple as that.”

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No complexity in retirement advice, I totally agree with you Mr Union fund.

Firstly you campaign to make advice unaffordable then you say it shouldn't apply to your vested interests.

You and your cohort should be totally ashamed of yourselves and the damage you have done to the very members you "claim" to represent. In reality it's just your snout in the trough you really care about.

Instead of claiming you should be exempted from the mess you helped create, why don't you be the vanguard for fixing it? Only then will I believe your purported claim that you have any care or consideration for your members and all Australians.

Huh huh huh you could see this coming from Industry Super & ASIC for years, open slather for Intra Fund sales on every piece of Advice, including full retirement Advice.
We have an algorithm and your MetaData so we will:
- lock up a big chunk of your money into a Lifetime Annuity, sorry if you want capital the algorithm can’t help.
- we’ll spit out a 1 off Centrelink Age Pension assessment, hope it’s right as you gave us access to your MetaData, Centrelink get it wrong most of time good luck sorting that out & good luck for the rest of retirement dealing with Centrelink.
- the rest goes into a so called Balanced fund with 94% Growth assets, sorry about the next market down turn.
- zero fee disclosure as the members not getting advice ALL pay HIDDEN COMMISSIONS so you don’t pay any real costs, besides your HIDDEN COMMISSIONS.
- Zero AFSL compliance as we have connections in Canberra with ASIC, etc and got a complete carve out normal regulations.
What an absolute disgusting JOKE :-/

Hello, here is our simple product, no need for advice it is truly great and more suitable to you than your current product (generally speaking).

Oh, whats that? You just lost your Age Pension as this new product isnt grandfathered...? Oh well thats not our fault, you made this decision yourself! (with our general guidance).

Retirement with the biggest lump sum of cash you may have had in your life to provide an income for the rest of your days linked with age pension rules.....easy peasy......can't see why you would need advice here..
Trust me i'm from CBUS and i'm here to help you, i mean me, retain all your funds

In some ways the union funds are right to say advice shouldn't be needed for most retirement income situations. That's because we should have a simple, fully funded, defined benefit, superannuation system administered by the government. But when Labor introduced an unnecessarily complex system in the 1980s, designed to allow unions to skim off a proportion of compulsory superannuation, they created a need for more advice to navigate that complex system.

The real reform needed in superannuation is moving all compulsory super to direct administration by a government agency similar to the Future Fund. People who want to save additional amounts for retirement could do so as they please outside the superannuation system. Unfortunately Labor would oppose this even more than the free market champions in the Liberals, because it would cut off a major source of union funding.

What I don't get is that we're even debating this in the first instance. Age Pension is accessible to +70% of retirees and this won't change (rather just the % on full entitlement). This represents the best income guarantee available. Why would you lock up more of your money in a lifetime annuity or far worse a DLA. The pay-pack period of your own capital is not (YES NOT) in most members best interest. For example if you take out a 15 year DLA at age 65 you won't get it back until close to age 90 and very IRR. There is next to now upside here despite the fact that a good portion will live past age 90. Moreover, the anti-selection risk for these products will no doubt come onto APRAs radar ...but after the event of course. Anyone telling you that there is merit in a annuity or guarantee is not the person you want to be seeking advice from. Yes the 40% exemption from asset test help with Age Pension but it's still requires blind faith and in most instances requires very specific circumtances that can't be rolled out as a default. The financial services industry if still full of people that have very limited financial acumen.....

Yeah nightmare if it goes down this track. Take QSUPER's new Lifetime Income Account, I've got members who are retiring coming to me telling me it's no good, but they are the ones that have bothered to read the terms, most won't and then when they pass and discover some of the reversionary outcomes are very poor it will be a very dark outcome, and cost the government more because Aged Pension reliance will increase

Bozo, can you expand on your comment "...the reversionary outcomes are very poor..."?

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