Return of super, banks ‘welcome addition’ to advice industry

As is now widely known and rather feared, the Quality of Advice Reviewer (QAR), Michelle Levy, has recommended that superannuation funds, banks, and insurers be granted approval for a limited return to advice. And while battle lines appear to have been drawn with superannuation funds and industry groups on one side and independent financial advisers on the other, an industry professional has urged advisers to reconsider their disapproval of Ms Levy’s recommendation.

Speaking on an upcoming episode of the ifa podcast, founder and director of Forte Asset Solutions, Steve Prendeville, said, “What she’s articulated is that it’s algorithmic advice or limited advice, with a very tight parameter as to what that constitutes rather than providing full advice.”

“I actually don’t see them as a competitor,” Mr Prendeville said.

“I actually think that there is a great need for Australians to actually have access to limited advice or algorithmic advice.”

Mr Prendeville noted that while Vanguard, which announced in November that it plans to “reshape” super with its new market offering, is expected to make a “very big splash” within the marketplace, “it’s not a competitor force”.

“We feared robo-advice, but when we have a look at the global experience, it’s more that, and super funds to a great degree as well, they’re more in like an incubator, but when there is a real need for advice, that’s when they come to full financial advice,” Mr Prendeville said.

“I believe it’s a welcome addition, I don’t see it as being overly competitive in nature.”

Last month, new research released by the Financial Services Council (FSC) showed that by implementing QAR proposals, the government would be ensuring an additional 2 million retirees benefit from “high quality and affordable advice” that is fit for purpose.

Commenting on the research, which revealed that QAR would help an additional 2 million retirees spend $22.5 billion more and leave $6 billion less in bequests annually by the year 2040, the CEO of the FSC argued that if advice policy settings are left unchanged, only a third of retirees will get financial advice over the next decade.

“A generation of retiring Australians would benefit from high quality and affordable financial advice that is fit for purpose on the topics they want, when they want it,” CEO Blake Briggs said.

“The review’s proposals would help millions of Australians put in place a plan to spend more of their superannuation with confidence and in a way that improves their financial wellbeing throughout their retirement.”

To hear more from Mr Prendeville, tune into the podcast next Wednesday.