Intrafund advice simply not enough says FPA

People who receive comprehensive financial advice experience an 85% higher financial well-being than those who receive intrafund advice.

That is one of the core elements of a Financial Planning Association (FPA) submission to the Government Retirement Income Review, with the planning organisation arguing that the inherent complexity of the Australian Retirement Income System (RIS) makes the involvement of financial planning critical to ensuring retirement incomes adequacy.

It said that, on the available evidence, the complexity of the existing system and the inter-linkages between the superannuation guarantee, the age pension and personal savings, made it difficult for consumers to understand.

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As well, the FPA sought to play down the usefulness of intra-fund advice beyond superannuation.

“…the capacity of intra-fund advice as an enabler of the ‘system’ and the interaction of the three pillars is limited, as such advice cannot consider the individual’s circumstances outside their interest in the fund,” it said. “This limitation is of most significance when considering transitioning to retirement. Absent from intrafund advice considerations are the individual’s assets held outside of that particular superannuation fund, tax implications, health and aged care needs, spousal and family financial arrangements, and eligibility to social services benefits including the Age Pension, for example.”

“Decisions made in relation to the individual’s superannuation can positively or adversely affect the other pillars of the system. Hence, making decisions about superannuation in isolation can hinder cohesion of the system.”

“Personal financial advice plays a key role in improving the cohesion of the system by helping clients overcome the issues created by the complexity of the RIS, making the interaction of the pillars work as appropriate for each client’s circumstances, and importantly, educating clients about the system and financial management more broadly,” the submission said.

“Further, those individuals who engage in comprehensive financial planning experience an 85% higher financial wellbeing over those who have engaged in limited planning such as intra-fund advice. Increasing understanding can impact on member engagement and reduce the possibility of poor decision making.”

The submission said that financial planners also acted as a conduit between consumers and providers, both private and Government, providing service providers with an informed source of consumer information and detailed insights into consumer needs and preferences.

“It should be noted that the financial planning industry has undergone significant reform over the past decade. For example, the Future of Financial Advice (FoFA) reforms and the establishment of legislated professional and education standards have been implemented,” it said.

“Government, the private sector, and individuals all face a challenge to encourage a savings culture and integrate the roles of the three pillars to provide an adequate, equitable, sustainable and cohesive Retirement Income System into the future. The role of personal financial advice in helping to change the attitude of consumers in relation to the accumulation, use and management of retirement savings and the cohesion of the RIS is significant.”

“Making personal financial advice more accessible for all Australians would enhance the operation, sustainability, adequacy and cohesion of the Retirement Income System,” the FPA submission said.

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We are busy sacking clients at the moment, most of whom are in the spectrum of the aged pension. We still care for them but cannot afford neither the business risk with the current rounds of reforms nor the financial cost of retaining thanks to the ridiculous levels of compliance.

Unfortunately for them I think we are the only one's that care. Unfortunately there's a limit to how much red tape and compliance risk we can bear.

When sacking those clients make sure to redirect them straight to their local MP's office. Be sure to provide the MP's name and address, and make sure they insist on speaking with the MP personally rather than their underlings. Tell them not to leave the office until they do, and be sure to ask for lots of tea and biscuits and to use the office toilet while waiting.

MP's need to hear first hand from all the consumers they have harmed through expensive, overcomplicated, red tape. The great thing about retiree clients with limited money is they have plenty of time to wait around in MP's offices, and are very happy to unload their grievances. It's their democratic right.

Intra fund "advice" fees are simply fees for no service. Most members compulsorily paying intra-fund advice fees never receive this advice and have no way to opt out of those fees. Intra-Fund must only be permitted for basic service work or for providing fund information. It has been rorted by the union super funds, cleverly sidestepping the massive regulatory burdens they have been able to impose on their competition.

Clearly out of touch with the average Australian who generally speaking dont need / can afford comprehensive advice. How many advisers that are currently employed as financial advisers with industry funds are also members of the FPA? Similarly in the tax world, there is a role for PWC and H&R Block... its all about choice and need.

"Out of touch" you say. Unless I'm missing your point you are the one who is out of touch. How many industry fund advisers will help the fill out the almost impossible centrelink forms so they can get the seniors health care card? How many industry fund advisers will double check the asset register, not just their super, to remove double ups to make sure they are getting the right pension? How many industry fund advisers will explain the estate complexities of their split family and how their simple will is wide open to a challenge?

Some of them may do this but it won't be the majority.

Further once Hayne recommendations come through the Trustees of these funds will no longer use the cross subsidisation funding model these advisers so they'll have to get jobs elsewhere just to eat.

Again the marginal clients will lose sources of valuable advice and they have NEVER been comprehensive advice clients for any business or super fund.

This is NOT an argument between the advice models, it's an argument that those that have previously received some advice when they needed it, often pro bono or at heavily concessional rates, cannot be afforded with the changes being brought in by ANY advice model.

The only winners will be the lawyers acting against those businesses that didn't take the unpleasant but necessary decisions we are now taking and cutting these poor people off.

C'mon, 'almost impossible Centrelink Forms' and double checking the assets register so assets are not double counted. Let's not try and over complicate it! A Grade 6 child could do that and how many Advisers actually do that themselves and not have admin staff complete these 'value adds' so they can charge heavily concessional rates. Give me a spell.

Either you’ve never actually done this or never tried to assist a 60+ yo person do it.

Done it once or twice over the last 12 years.

THE POINT IS.......Ind Funds were sailed through the royal comm. Did Hayne believe Shorten was going to get in and wipe Financial Planners off the map so Aust Super's board members bump up the bonus that they donate to the AWU? That is the question.

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