Lawyer warns advisers to tread carefully regarding super reforms
Peter Bobbin
Advisers need to bring balance to the situation of investors rushing to put money into superannuation before June 30 to ensure clients are making the right moves, according to the partner of legal firm The Argyle Partnership.
In what he described as a frenzied rush to liquidate assets and invest into superannuation, Peter Bobbin said advisers needed to “deal with the risk, or the risk becomes [theirs]”.
Fronting a recent gathering of financial planners at a Macquarie Investment Lending forum in Sydney, he said that for individuals and their advisers, “Super is the solution and super is the problem”.
Among the risks, Bobbin believes advisers needed to make clients aware of the “living too long” risk associated with account-based superannuation pensions.
“If you advise enough [clients], one of them will live too long … And if you are unlucky, you might live long enough to receive the statement of claim,” he said.
Bobbin advocated that advisers ignore the hype and “do what you do best; plan with and for the client … you know the good rules, but what do you need to look out for?”
A key statistic he pointed out was that the average retirement age for women is 47, leaving most with 13 years of largely self-funded retirement before accessing retirement benefits.
“Warn them that they will want to retire before the super tax free age of 60 and they need to plan for this,” Bobbin said.
He quoted statistics from the Australian Bureau of Statistics showing average retirement ages for people aged 45 and over is 52 years of age (age 58 for men and age 47 for women).
Bobbin sought to remind advisers to establish with the client when they will want the money, whether they will need it before the tax-free age of 60, whether they will be able to access it free of preservation and whether they have bridged any retirement gap with non-superannuation money.
Particularly in light of the Financial Industry Complaints Services’ current emphasis on conflicts of interest, “You must manage communication, sign off on how you take instructions and risk manage”, Bobbin said.
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