Speaking on a recent episode of the ifa podcast, the founder and director of Neilson & Co Wealth Management, Ben Neilson, praised the Quality of Advice Review (QAR) lead, Michelle Levy, for doing a “fantastic” job.
Mr Neilson said Ms Levy deserves praise for navigating her way through an “incredibly complicated” piece of “building-block-based legislation” and to high degree.
“If we look at between four and nine recommendations that a practitioner-based benefit, they’re just amazing,” Mr Neilson opined.
Unlike many of his peers, Mr Neilson supports Ms Levy’s recommendation to permit superannuation funds to offer limited advice, a recommendation that he believes would allow advisers to reduce the amount of time they spend on tasks that do not have a tangible impact on their clients.
“If we reduce the amount of thing we have to do while increasing our regulatory adherence, we can actually service more people faster with fewer outgoings,” Mr Neilson explained.
“If I say I’m going to do super and insurance for someone around my age, mid-30s, with maybe a kid, that sort of thing, you’re probably looking at between $2,000 to $4,000 […] or we can charge you $600 and you go to that product and get a portion of those things done and report back to us when they have been done. We’re actually decreasing our risk but increasing the amount of people we can service.”
Mr Neilson explained advisers should reconsider Ms Levy’s proposals regarding non-relevant providers by stress testing them against real-life scenarios.
“Every adviser in Australia is going to get to a point, we’re at it now, we’ve got about 200 ongoing clients and unless I feel like working Saturdays, we can’t really take on much more,” he said.
“So, if I can reduce the amount of time I spend on each individual case and say these things need to be done, can you please do them … There’s an opportunity for us to combine, we do the part that needs professional expertise, and someone else, be it a non-relevant provider or the consumer themselves, do the part that’s not that important.”
Mr Neilson believes that this could help advice develop into a true profession.
Conceding that superannuation funds are “not very good” at providing advice, Mr Neilson clarified that Ms Levy has not suggested that they do so.
“The one true barrier to accessing advice is cost and if I include cost in its application of complexity, there is going to be a part that the superannuation providers can do, they can do nominations, they can do investment philosophy, they can do little things like that, but they can’t generally sit with the client and say what does this actually mean to you and hold their hand.
“If we are to develop into a true profession, we can do the complex stuff very well and reduce the cost while increasing the value as a result,” he said.
In Mr Neilson’s hypothetical world, advisers would present their clients with a full list of actions that they would need to implement to achieve their financial goals. The list would be divided into two columns, one representing tasks of critical value that an adviser needs to manage, and the other reflecting tasks that the client could manage on their own or with the help of a non-relevant provider.
“We’ll bill for the top end, you [client] figure out the bottom end. If they want us to do it, we’ll do it, but we need to let them know it’s expensive. That way we change the whole narrative of financial planning,” Mr Neilson said.
To hear more from Mr Nielson, click here.
The largest area of concern with Michelle’s recommendations is the grey between what a Relevant Provider advises on and what a non-Relevant Provider is allowed to advise on. To date there has been no indication of what controls will be implemented to prevent the non-Relevant Provider overstepping the mark.
So, outsource the logistics of your advice to a super fund or similar provider? To enable lower fees and greater scope to assist more clients. What could go wrong? So you would entrust your client’s best interest to Australian Super or MLC Mastertrust? Hmm… do you even like your clients? When errors occur (which are not uncommon), who is responsible to remedy? Who is liable for any losses? Slippery slope IMO.
Yep thought exactly the same.
Sounds nice in theory.
Reality is it’s a disaster waiting to happen and then the cost of clean up is even more that doing right the first time.
And mind you my 60, 70 and 80 year old clients well to do clients are happy to pay for full service, not some half arse DIY project.
Anyway glad to see new ideas, hope it works for you and your clients.
I agree with this 100%. Advisers need to stop being reactive in the way they think – this presents opportunity to those that can see … once you engage more Australians in initial advice – more opportunities for complex advice will occur. Stop being paranoid about union super funds giving advice – we need to co exist or we will go not them… they have the muscle not us …if you are interested research the wage Accords in the early 80s that Keating set up after consulting unions .. thats the birth place of super today !! if you connect the dots its all there. you will see advisers are a blimp on the radar so we need to just get on with it
love Ben’s optimism but how the hell is that model going to work? $600 fee for the advice without doing any of the implementations? Hoping the clients can figure it out for themselves? Then no ongoing trail to help with all the inevitable ongoing queries? Get in $600 but miss out on the $4k to $6k plus the ongoing at 20%???
I refer 80% of my clients to a lawyer for wills and less than 10% follow it up and do it. This idea won’t work.
“…but we need to let them know it’s expensive.” Apply this comment to other “professional” scenarios i.e. Lawyers, Accountants and the like – have never heard them refer to their costs as “expensive”! Only find out after the work done is invoiced.
Lots of good Ideas, we just don’t have to accept them all and the one that would let unqualified back packers give full retirement advice provided by super funds is not even a question.
I can see the ads now Industry fund compare the pair ads don’t see an advisers they charge to much and we can do it for free. When reality is they are charging millions of members for a service only a few use.