Choice claims advice not always necessary

Consumer group Choice has claimed that the provision of financial advice in superannuation is not always necessary and can, in fact, act to disadvantage consumers.

In a submission to the second phase of the Cooper Review into superannuation, Choice claimed that advice had often acted to the disadvantage of consumers, “resulting in commission-driven sales that push consumers towards expensive retail funds”.

The Choice submission then suggested that, in contrast, advice did not play a significant role in non-profit industry funds, yet those funds had millions of members.

It said that for those consumers who believe they require advice, it would be useful if they had the option to approach an independent, non-profit provider.

“This might require enhancing current services provided by some government and community organisations, such as Centrelink and the National Information Centre on Retirement Investments (NICRI),” the submission said. “Both these organisations focus on advice at the time of retirement, or close to retirement.”

It said this meant there was a significant gap in the availability of non-profit, independent advice services for people entering superannuation or reviewing their superannuation options during the accumulation period.

The consumer organisation claimed that existing services should be enhanced and that these should be complemented by a new, specialist organisation representing the interests of superannuation members, with the ability to provide independent advice and assistance.