Value of advice needs to be delved further
The Retirement Income Review needs to assess the value of financial advice before and after retirement across portfolio, financial, and emotional outcomes, Vanguard believes.
In a submission to the review, Vanguard said some of its recent research in the US found that advice led to more appropriate portfolio outcomes relative to the experience of unadvised investors – such as improved diversification – and that the improved emotional component was a significant driver of overall outcomes.
“A similar exercise in Australia, if possible, would provide insights into the cohesion of the system,” it said.
Vanguard also said the value of advice assessment needed to find out whether the current advice framework of general information, general advice and personal advice, along with corresponding restrictions of product and service providers to household and individual information aligned with delivering the purpose of the retirement income system.
“Treasury, for example, in its Retirement Income Covenant Paper recognises in principle seven that ‘the specific preferences and characteristics of an individual member may affect their optimal retirement income solution’ and to meet this advice may be necessary,” it said.
“It raised that key factors, such as marital status and age pension eligibility could be brought into scaled advice provisions.
“In Vanguard’s experience, factors such as these can have a significant impact on strategy recommendations, and therefore it would be valuable for the review to consider ways to make such information more generally available to deliver strong outcomes.”
Recommended for you
ASIC has accepted a court enforceable undertaking from a Perth-based company auditor who failed to adequately conduct multiple audits on an advice firm that receivers say has $100 million missing.
After a brutal month for adviser numbers, the net loss for June now stands at more than 100 advisers, but the financial year is still on track to end in positive territory.
Two advice platforms have been identified by Adviser Ratings as standouts for efficiency as time-pressured advisers become evermore fickle in their platform selection.
Private wealth manager Escala Partners has increased its alternatives allocations to more than a third in the past three years, describing the asset class as offering “fertile ground” for diversification.
