Michelle Levy, reviewer of the Quality of Advice Review, believes super funds already have too much on their plate to provide retirement income advice to members.
Speaking at the SMSF Association Technical Conference in the Gold Coast, Levy discussed the recommendations in the government’s formal response to the QAR.
In the second stream, the response focused on building a way to expand access to retirement income advice.
The focus of this is the idea it can be provided by superannuation funds, potentially by financial planning students.
At the time of the response, Minister for Financial Services, Stephen Jones, said he wanted to start with super funds as they have a different regulatory regime to banks and insurers.
Levy said: “It’s going to be really hard. Superannuation funds are being asked to do so much and solve so many problems, and it does worry me that this industry issue only has to sit with superannuation funds to solve.
“APRA and ASIC released their report on the Retirement Income Covenant where they said most funds are not acting quickly enough or complying with the covenant and part of that is because what they are being asked to do is just too much and too hard, and exposes members of the fund to risk.
“Solving the retirement gap can’t just sit with super funds. It’s too much of an issue.”
She added the government’s idea of advice from super funds is at a larger level than she had originally envisaged in her Quality of Advice final report.
“The kind of advice that the government is looking for super funds to give is probably at the harder end of the spectrum, and I worry it will be a bad guinea pig for the recommendations as a whole,” she said.
“I thought they would give much simpler advice, so I worry this is the wrong place to start.”
Spiro Premetis, executive director of policy and advocacy at the Financial Services Council, added its members felt digital and automation would have been a better starting point than them providing financial advice.
“You need the right scope, the right charging model and the right competency standard. The big risk for consumers is if we build something that is bigger than Ben Hur and we allow collective charging to apply on it, then we have saddled consumers with all this cost in a way that is ineffective and that would be the worst of both worlds.”
SMSF Association chief executive, Peter Burgess, said accountants could be an alternative option to provide advice. Around half of the SMSF Association’s members are accountants while the remainder are financial planners.
“If we are serious about closing the advice gap, then accountants have to be part of the conversation. There are thousands who are qualified and are sitting on the sidelines.
“We have tried to fix this for over 20 years, and we haven’t found a solution. But we are keen for them to provide some form of limited advice on SMSFs, in particular, and they have a role to play. It surprises me that they haven’t been part of the conversation.”
Another episode of telling the audience in front of you what they want to hear. It will be banks next week, insurers the next and on it goes.
The QAR is flawed in a number of ways and areas – the outcomes will unfortunately reflect this too
I have an idea – why not get the butcher, the baker and the candlestick maker to give financial advice too!
Accountants provide financial advice? That’has worked well in the past. There are very few that are qualified both in tax and financial advice.
Rather than the industry funds getting into advice, why not engage another License to outsource this to. This Robo-advice solution keeps getting bandied around like it is the fix all. Perhaps its the solution for really basic stuff but people are getting wealthier out there and things like estate planning are becoming more complex. Real conversations need to be held in person in many cases. The industry funds need to have a real advice offering if they are going to control the majority of savings.
That is correct Ms Levey, nice to see some facts being written about instead of theoretical piffle
Reading the comments from Jones make things very clear.
Superannuation funds should be the central source of ALL financial advice.
This includes mortgages, Centrelink and superannuation.
His vision is for all fund members to be charged a fee by the fund for this advice whether the service is used or not.
As for qualifications of those delivering advice, his believes this is of secondary importance.
As long as the advice is source from the super fund all is fine.
He sees no future for independent advisers. He will not say this. However, the compliance regime and educational standards mandated will ensure that very few survive.
It’s not possible for a super fund to provide appropriate advice unless they have an open investment and platform menu. There is too much at stake for retirees if they only get intra-fund advice at this stage of their lives, it’s complicated.
Hi Royce, individual advisers will survive as we have more work being referred to us than we can cope with as the majority of people have lost faith and trust in the large corporates, sorry to disagree but i have been hearing individuals wont survive for decades