In the next three years, some of the people who are currently excluded today from getting advice will be able to gain confidence to get advice as advisers will have the equipment and knowledge to sort through the noise, according to a panel.
Speaking on a panel at the Association of Superannuation Funds of Australia (ASFA) conference, Link Group’s general manager for Link Advice, Duncan McPherson, said the people currently excluded from advice typically had lower financial literacy and interest, had lower incomes, had less savings, were less likely to support themselves in retirement, and were less likely to pay for any advice.
McPherson said these excluded people needed help with bill prioritisation, cashflow, and budgeting and that there was a greater need for that kind of advice and the industry needed to rethink what it was trying to do and not to only service the typical advice target.
“In the next three years we will see a really big shift. Some of those people excluded today are going to be able to gain confidence to get advice as they will have the ability to access information and education. Advisers will have equipment and knowledge to do what they need to do and will sort through industry noise, and reforms in the last 10 years will kick in,” he said.
“As a cohort we will start working more together and once we do we’re not worried about where someone goes. If we can do that within the next three years advice will be as important as information and education.
“Just imagine that person who retires – they know what to do as will put that money in an income stream, apply for the pension and go on with their life and that’s where we have get to.”
Also on the panel, Aware Super group executive advice, Sarah Forman, said the industry needed to think about how to make the transitional from general advice to a guided experience that was valued by super members.
“The optimist in me is that we will make a breakthrough in the next three to five years. We will move to a world where there is less fear in how you provide compliant advice and therefore people stepping back from industry, people expanding out their statement of advice, peopling lifting the cost of production because of the quality assurance work they need to do around that advice, and remove some of the complexity and confusion that sits between standards and law and those sort of things,” she said.
“That’s going to allow us to bring down cost to allow us to do limited advice, modular advice, or simple subjects people want at a very low cost as a stepping stone into more comprehensive, fuller, advice. We will also crack through some of the digital limitations that exist today to allow people more opportunity to get that advice self-directed through tech.”
Fitzpatricks Private Wealth chief executive officer, Matt Fogarty, said the next few years would see the industry’s environment stabilise which would underpin the ongoing investment into requirements such as technology.
“We will have got through the legislative framing and be able to make smart changes that make the provision of advice and ongoing support of advice for clients a bit easier. Education standards would have worked through so what we’ll have is a well-educated group of professional advisers and that in itself is a big landmark,” Fogarty said.
“The preference is to see us working more on a principles-based approach so I’d like to think we’d get more to that as an outcome of some collaboration that could occur between industry providers. I could imagine that in three years time, or sooner, the right stakeholders are sitting around the table working together for the consumer for what it is going to take to make advice affordable, accessible, meaningful for clients and the true value of advice is experience by more people.”