The Government may drive people out of MySuper products if it completely removes the ability to deduct advice fees.
That is the warning issued by major superannuation industry organisation, the Association of Superannuation Funds of Australia (ASFA) in a submission filed with the Treasury.
In similar fashion to both the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA), the ASFA has warned that by closing off the ability to deduct advice fees, members of MySuper products will be forced to move to choice products from which advice fees can still be deducted.
“There is a risk of inadvertently incentivising movement away from MySuper with the complete removal of the ability to deduct advice fees, as members will be required to move in order to receive advice, in circumstances where they do not have the means or inclination to pay for the advice out of pocket,” the ASFA submission said.
“It would also be inequitable to determine whether advice can be accessed based on the type of account or investment option a member has their superannuation invested in. Many consumers are likely to view MySuper as an investment option within their total superannuation account,” it said.
“Practically speaking, from a consumer’s perspective, the effect of the bill is to hinder access to advice and the retirement outcomes they aspire to.”
“As the ASIC [Australian Securities and Investments Commission] report on what consumers really think about advice noted, two of the three most common topics that survey participants said they had either received, or were interested in receiving, financial advice on were retirement income planning and growing their superannuation,” it said.
“One of the key barriers to getting financial advice identified in the report was cost.
If cost continues to be a significant barrier to getting financial advice, prohibiting the deduction of advice fees from MySuper may result in poor consumer outcomes. A growing number of consumers will not receive advice at all or will move to other investment options or products in order to fund the financial advice.”
Comments
With Hayne's MySuper recommendation having been widely condemned as counterproductive stupidity, let's hope this prompts some more questioning of Hayne's other recommendations.
Hayne's skills are in courtroom showmanship, not industry reform. He is completely undeserving of the faith placed in him to come up with the best recommendations for change. The govt needs to properly review and refine his recommendations rather than slavishly implementing them. It is a complete failure in their responsibility to the nation, to allow a courtroom showman to be dictating govt policy unchecked.
Agreed.
The knee jerk response from Govt to blindly agree to everything Hayne put forward is completely irresponsible.
It was driven by fear of a backlash from Labor, the public and the media if they didn't appear to round around in circles clapping every time Hayne opened his mouth then they would be accused of avoidance and supporting the "big end of town"
as the media just loved to use every 5 mins.
The Liberal Govt are scared to challenge and lead.
Josh Frydenberg is scared to question and challenge.
Scott Morrison doesn't care about financial services.
The trouble is that the blind implementation of Hayne's ideological based recommendations ends up hurting the Australian consumer because the cost of accessing advice will place most everyday Australians out of the financial demographic that advisers need to work with.
Kenneth Hayne isn't qualified to provide advice on the structure of the industry and unqualified to comment on the immense impact of legislative over reach on small business and the flow on impact to their clients.
It is irresponsible management on behalf of the Govt who are controlled by ASIC.
"There is a risk of inadvertently ". Years ago, this would have translated into "incompetent policy making". Now we have terms such as "inadvertently" and my favourate, "unintended consequences". Either that, or the Liberal Government is doing this deliberately? Really amazing if the policy advisers didn't see this one.
"One of the key barriers to getting financial advice identified in the report was cost". Really, didn't see this one coming? Perhaps the Liberal did, and they will (along with the FPA) next endorse "Advice" as affordable all delivered under "General Advice" - paid for by Intra Fund Advice Fees and delivered by the product providers.
If that's what "community expectations" are all about, then welcome to it.
Yes, MySuper Fund members having their accounts debited for intra-fund "advice" should give informed consent for this deduction, annually, IN WRITING. If not, those intra-fund advice fees need to be switched off. Time to stop the Union fund salary/bonus racket.
I'm sure the many retirees nervous about the current state of investment markets will be totally satisfied talking things over with their industry fund call centres staffed by overseas backpackers and McDonald's graduates or their robo-adviser as per the government's wishes.
Over time those union fund call centres will be increasingly staffed by young financial planning graduates with no experience, who are caught in unlicensed limbo because they can't get anyone to supervise their FASEA mandated Professional Year.
Experienced, licensed, planners are becoming too overwhelmed by costs and regulation, to take on the additional costs and regulation associated with PY supervision.
Yes.....I wonder if these people have ever heard of a thing called a home visit ??
You know, where you actually leave the office and drive for an hour and a half to see a client in their home or business to discuss important matters and get to really understand the client as a person in their environment and surroundings and to let them know the value of the relationship goes a lot further than simply a transactional
process?
Where the client understands the level of knowledge and care in regard to their own circumstances is well understood because the adviser has " walked a mile in their shoes " as part of the " needs analysis ".
Whilst technology is great and efficient, when people want to discuss what is important to them and their family , it is about human to human interaction, empathy, concern, consideration, respect and trust that galvanises the relationship.
Whilst costs and fees are important, it is not the most important component to many.
Consumer's determine value and if value is not delivered then it is likely to come under scrutiny, however, value does not always reflect the lowest price paid for the outcome.
If you had a serious medical problem, you wouldn't be looking for the cheapest medical advice and yet the continued obsessive focus from media and the regulator in regard to fees is misleading.
Yes, I have come to the conclusion that I am really providing a UBER Docx Visitation Service, just to get all the pointless Fed Govt red tape paperwork signed with our elderly clients who are can't keep up with the internet. The financial advice is thrown in for free. This is how cooked this has all got too. And the FPA has a lot to answer for in caving into this mess.
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