Will Govt’s post-retirement fact sheets erode advice?

11 December 2018

In a move likely to impact financial advisers, the Federal Government has released a consultation paper on Retirement Income Disclosure which it said was aimed at helping consumers maintain an appropriate standard of living in retirement.

However, the Government’s consultation documents argue that the provision of standard metrics would not constitute financial advice and that it wants to exempt such arrangements from the advice framework.

“Clarity regarding the interactions with advice will be addressed as part of the regulatory framework of the retirement income framework,” it said. “At this stage, the preferred option is for the fact sheet to be exempted from the advice framework, similar to the current treatment of [product disclosure statements] PDSs.

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 The paper proposes a range metrics to help consumers assess a particular retirement income product aligns with their own preferences in relation to potential income, flexibility and risk management with the data being delivered by way of fact sheets.

Launching the consultation period, Assistant Treasurer, Stuart Robert said the factsheets would cut through to the key features that mattered when people were making retirement income decision.

According to the consultation paper, the approach being proposed by the Government is premised on average real income from a $100,000 investment over the period from retirement (currently age 67) to age 97 with the income being net of fees and taxes and presented as a fact sheet graphic.

It suggests that a range of options could be considered for presenting income, but that “describing expected retirement income as ‘take home pay’ from the product may make the concepts more user friendly for consumers”.


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Can consumers who act on this "free" advice sue the Federal Govt if the "advice"
provided on these fact sheets eventually prove to be incorrect or create economic loss?

The people in the government that are making these better come under the same education requirements as financial planners have too. To be giving facts about financial products or strategies everyone in these teams should be have the right qualification which I bet they don't. Have these fact sheet been worked on by real people from the industry that would help

The basic concept is sound, but the actual delivery sounds inappropriate.

Long term projections are just that - they are long term hopes and guesses and possibilities. Hopefully, the disclaimers will be highlighted BEFORE the actual projections.

There is so much that is wrong about the current financial general/personal advice regime, and these fact-sheets could be a great way of overcoming the knowledge deficiency investors have when confronting the advice market. It's just that an awful lot of care should be taken before just issuing something that will potentially bring about market-changing outcomes.

To be specific - too much of the material presented in the public arena is guesswork paraded as fact. I would certainly like to see far more rigour applied in the probabilities of this versus that outcome. Monte Carlo analysis would help people to see that there is no single correct answer in a projection - there are a range of possible outcomes and their portfolio can fall anywhere within that range.

If you want an even more obvious example - these ridiculous Federal Budget papers we have to endure every May. A single outcome is put forward, out of a huge splash of potentials. Small changes in income will have huge impacts on the actual deficit/surplus, yet this is at no stage made apparent.

If the factsheets come out in the budget format then I'm gonna have to put more time aside to help explain to people where the "fact sheets" can be wrong.

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