Tweak regulations for intra-fund advice

Regulations as they are currently structured are hampering superannuation funds from providing mass recommendations and personal intra-fund advice to individual members using their personal data, according to Morningstar.

Morningstar managing director, research strategy, Asia Pacific, Anthony Serhan, said that technology and the availability of data were enabling trustees to construct models to assist individuals in retirement but regulations were such that it was difficult to deliver the advice to members because of the cumbersome statements of advice requirements.

In talking about comprehensive income products in retirements (CIPRs) and providing intra-fund advice for retirees, Serhan said there had not been sufficient discussions around how trustees of superannuation funds could deliver better personal advice to members around their retirement income structure.

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“It’s hard unless people are going through the full statement of advice process with the financial planner, which some people will want to do but I think when we’re talking about CIPR, one of the objectives is the many millions of people who are going to need help and assistance, and that’s where regulation and advice need to come together to make it easier to provide those people with advice,” Serhan said.

Serhan referred to the Australian Securities and Investments Commission’s (ASIC’s) regulatory sandbox for fintech start-ups, and suggested “reasonable” carve-outs for intra-fund advice on retirement incomes that trustees could provide by utilising technology and data.

“I’d start looking at some of the stuff that are going to help people in retirement without tripping it over into the full-blown personal advice sphere with statements of advice,” he said.

“To be clear, I’m not saying there should be this free-for-all and anything should be allowed online. What I’m saying is there are definite steps that can be taken where reasonable degrees of advice or modelling can be done and communicated to people online because of where technology has gotten.”

Technology has enhanced the way data is gathered and stored, has increased affordability, has enhanced the sophistication of modellings, and has enabled more informed decisions for members’ and the sorts of retirement income products that would suit them.

“So technology has been the enabler; what we’re saying is, is the regulation catching up with technology in terms of what can be done?” Serhan asked.

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