Students of financial planning degrees could be sourced to provide financial advice to superannuation fund members, according to the Financial Advice Association of Australia (FAAA).
The ability for superannuation funds to provide financial advice to their members formed a key part of the government’s response to the Quality of Advice Review (QAR) and is part of stream two of the recommendations seeking to improve access to retirement income advice.
Super funds have been described as the big winners from the QAR, which was announced at the Association of Superannuation Funds Australia last week.
In a webinar with FAAA chief executive, Sarah Abood, and interim general manager of policy and advocacy, Phil Anderson, the pair discussed the QAR and next steps – including how super funds could provide financial advice and who could be employed to do so.
Abood said there is concern among FAAA members as to whether this advice from superannuation funds would be provided by non-relevant providers.
“We are open to this recommendation but we think it needs guard rails in a couple of areas,” said Abood.
“Firstly, people who are giving this advice, even as non-relevant providers, do need a level of education and a level of knowledge to enable them to give that advice in a way that is commensurate with the best interest of the client.
“You can’t take someone off the street and put them in a call centre, there must be education and specifically our view is we already have this education for financial advisers.
“Perhaps this is an opportunity where super funds could employ students of financial planning degrees who have completed relevant modules such as superannuation or retirement, but who haven’t completed a PY [professional year] yet but they could offer simple advice from a super fund in a way that is commensurate with the best interest of the client.
“This will be a big focus of our advocacy.”
Anderson added he did not expect all super funds to jump on the advice bandwagon as it would likely mean increased costs that could impact their result in the annual performance test run by the Australian Prudential Regulation Authority.
Recommendation 7 in the QAR response – to update the law to explicitly allow super fund trustees to pay a fee from members’ accounts to pay for personal financial advice about the member’s interest in the fund at the direction of the member – has been supported by the FAAA.
Anderson said: “There are natural limitations on how much super funds will want to give advice because the more they do it, the more that this increases their costs. Very clearly, there is intense competition around cost and higher costs mean they run the risk of failing the performance test which is a disastrous outcome.”
Next time I have a medical issue I’m sure a Med student wil be all I need.
FAAA you remain an irrelevant farce and useless to real planners
My phone continually rings with someone trying to sell me Solar Panels or phone plans or Electricity schemes. Most likely all based overseas. These super funds could hire those people as well. They have the skills. I look forward to sitting next to them at the next FAAA annual conference where we’re all equals.
Its actually a real s**t show. – they are probably going to be paid $150k pa each to do so. They will never join the ranks of geniune planners.
Maybe we can get advice on the go from Taxi drivers and UBER
Wow how far down have we come? Now we will have students with little experience advising clients on their retirement future. What a farce this is.