Late on Tuesday night, Financial Services Minister Stephen Jones unveiled further details of the government’s second tranche of the Delivering Better Financial Outcomes (DBFO) package, which he said would help fill the advice gap through expanding access to financial advice.
According to the minister, licensees will be permitted to charge a direct fee for the advice provided by the new class of adviser (NCA).
This enables advice businesses, alongside super funds, banks and insurance companies to employ these advisers and offer their services for a fee – this must be an episodic fee, with NCAs prohibited from charging ongoing fees or receiving commissions.
However, strict limitations will be imposed on the scope of advice these operatives can provide, with the minister noting that while the government anticipates some licensees will choose to indirectly charge for the new advice offering, they will now have the option to charge a direct fee.
Speaking with ifa, WT Financial Group managing director Keith Cullen said there are “two losers” from the announcement.
“The losers are consumers and the retail funds,” Cullen said.
“Consumers lose on two levels. The first level they lose on is that a whole bunch of them are going to be paying for services they’re not accessing – those that are members of the industry funds. They also lose because it will quash the innovation in retirement income products.
“The retail funds lose because they just can’t compete against it. They won’t expose themselves to fee for no service scandals. They’ll have to charge and so they’ll lose out, and their members will lose out because they won’t innovate new product to the same extent that they might have otherwise.”
Fractures between industry and retail funds surfaced throughout the consultation process on the DBFO reforms, with reports that retail funds and other advice stakeholders were pushing for the ability to charge for the services of NCAs.
Cullen added that unlike the industry funds, retail funds also don’t have the “advertising dollars” to run campaigns spruiking their ability to provide the advice through NCAs.
Association of Independently Owned Financial Professionals (AIOFP) executive director Peter Johnston echoed the sentiments around collective charging, saying the “devil will be in the detail”.
“Fundamentally, the AIOFP agrees with all institutions having internal staff giving product-related information to clients, which may include Centrelink/tax implications specific to the client’s circumstances,” Johnston told ifa.
“The only concern is how this activity gets funded. The ‘fee for no service’ model is unfair to those clients who do not use the service. Our understanding is that within the super fund experience, no more than 20 per cent of members access the service but 100 per cent get ‘clipped’ to fund it.”
Super Consumers Australia (SCA) also took aim at the “poorly trained, highly conflicted new class of ‘advisers’”.
“This approach encourages super funds to charge fees for no service and flies in the face of the financial service royal commission reforms to end this practice,” Super Consumers Australia CEO Xavier O’Halloran said.
“We want to see greater transparency on the quality and use of advice delivered this way to prevent people’s retirement savings being drained by low-quality advice they may never use. This is a huge win for super funds, it will now be easier to charge their members for conflicted advice.”
According to SCA, the reforms assume super funds are capable of delivering quality advice – an assumption the body strongly disagrees with.
“If the quality of advice currently being delivered by super funds is anything to go by, we have grave concerns,” O’Halloran said.
“Many funds are giving ‘one size fits all’ advice, which would either see people run out of money well before they pass away, or advising people to spread their savings well beyond age 100, unnecessarily reducing their standard of living while they are alive.
“Super funds have also been exposed for taking over a year to pay people death benefits and governance failures. Is now really the time to give them yet another responsibility they are demonstrably incapable of delivering on?”
Potential to be a positive for advice firms
Cullen argued that the NCAs could be a “win for advice” and firms that wish to employ them, adding that it is a “win for advice and a step towards opening up the supply of new advisers”.
According to the licensee boss, the announcement has the potential to address the “supply side problem” of advice provision; however, it is not the best way to solve the problem.
“The profession will rebuild itself to 20,000–25,000 advisers over the next five or seven years – if they can recruit people. There’s no one to recruit because of the narrowly cast degree,” Cullen told ifa.
“There were 35,000 commerce graduates last year. Every one of those should be able to start a PY tomorrow, do a DFP 134 while they’re in the first six months of their PY, and start advising straight away after that six months. That fixes that supply side problem, that will drive down the cost or proper professional advice.”
Lionel Rodrigues, chair of the AIOFP technical committee, had a number of questions for the government following the announcement, noting that “as yet there are no details available and it would be necessary to review not only the draft legislation but the regulatory guides provided by ASIC and APRA”.
Top of his list is whether NCAs would be required to pass the adviser exam and ethics exam, as well as how NCAs would record the advice provided – will there be a short form record of advice or statement of advice for the NCA that differs from that required for the professional adviser?
Other questions from Rodrigues include:
- Who will actually charge for the advice? The NCA or the supervising licensee?
- How will the ‘simple advice’ of the NCA be recorded? If not a written advice, then what is the standard that is required of the NCA to keep records of ‘verbal’ advice’?
- Can the NCA charge for such ‘verbal advice’?
Minister Jones ushers in a “poorly trained, highly conflicted new class of ‘advisers’… this is a huge win for super funds, it will now be easier to charge their members for conflicted advice.”
Where does old mate Kenneth Hayne stand on this one ?????
C’mon Ken…..time to speak up and speak out.
Fees for no Service was your bread and butter subject and yet here we are with a Govt that just sanctioned it.
He gets an extremely generous judge’s pension, for which he does absolutely nothing. But ‘pensions for no service’ at the taxpayer’s expense is apparently OK.
I have new clients that come to me with multiple industry funds. One fund will recommend their fund and the other will do the same. The client will end up very confused.
No, they will just keep all 5 Industry Funds in their MyGov accounts as a taxpayer funded MyGov Wrap Account lol
New Class of Adviser = Old class of sales rep.
Free advice for some fund members = Fees for no service for most fund members.
Short, concise and efficient, well said
Sounds like all this is designed by government and industry super, so that FUM can be retained in industry super, and then moved into complex retirement products/annuities that will lock the members super in for life, and allow the product to invest into the governments pet social projects. An example is the superannuation social housing projects. Win-Win for Labor & Industry Super!
And the cfmeu
In reality, the Hayne RC recommendations were primarily designed to eliminate bank advisers who compete against Big Industry Funds. They achieved this outcome, with only 11,000 active retail advisers remaining. And now there is a trail of destruction of confused consumers forced to sort the mess out at AFCA, that has been the direct result of the Hayne disaster made worse by Frydenberg.
The solution? Until we get rid of the Annual Fee red tape on retail advisers (that doesn’t exist for retail advisers in any other nation on earth), millions of Australians are going to continue being impacted by this over-regulated mess. The industry worked fine prior to 1990, with real retail advisers being paid to sort out the servicing mess created by the Hayne Recommendations.
What about fast-asleep active fund managers. HTF have those fatties managed to gorge themselves from the feed trough within the super funds and, in 83% of cases, fail to beat the index?
This whole New Class of Industry Funds sales agents is designed to meet the 5 million retirees that Canberra’s 20 years of ever increasing Red Tape has made far to difficult and expensive to get Advice.
Massive Canberra Pollies & Bureaucratic moronic own goal.
Besides all the bad Canberra’s Pollies & Bureaucrats and Industry Super have said for 20+ years about
– Conflicted,
– Single product,
– low education and
– Commisions Advice – NOW somehow THEY WANT TO let Industry funds do EVERYTHING they said was BAD.
Young Industry Super Fund members who will 95% not get advice will be paying for the fare wealthier Retirees to get Retirement Sales Advice.
THIS IS A MASSIVE CROSS SUBSIDATION OF ADVICE COSTS FROM THE YOUNG TO PAY FOR THE OLD.
Young people have to stand up to this and refuse to pay for much Wealthier Retirees.
NOT FAIR
NOT REASONABLE
DOES NOT PASS ANY PUB TEST
Yes we need our own DOGE here in Australia – too bad our Govt has snubbed Elon Musk otherwise he may have been willing to share his process on Dept of Govt Efficiency with us here.
Besides all the bad Canberra’s Pollies & Bureaucrats and Industry Super have said for 20+ years about
– Conflicted,
– Single product,
– low education and
– Commisions Advice – NOW somehow THEY WANT TO let Industry funds do EVERYTHING they said was BAD.
Exactly. Public Servants IMO no longer fit for purpose?
Don’t worry this dodgy draftwork from Jones is highly unlikely to ever get passed without major changes to the details that are causing an uproar…
The introduction of the new class of adviser (NCA) under the DBFO reforms is not only a strategic win for industry super funds but a move that risks undermining the integrity, competition, and consumer outcomes in financial advice.
A “Fee for No Service” Model
The ability of industry super funds to collectively charge all members for advice services—whether accessed or not—is a fundamental flaw. Critics such as WT Financial Group’s Keith Cullen rightly point out that this model disadvantages both consumers and retail super funds. Consumers are forced to subsidise services they may never use, while retail funds, which lack the advertising budgets and regulatory leeway to replicate this model, are pushed further into a corner. This echoes the Royal Commission’s criticism of “fee for no service” practices, yet the government appears willing to resurrect the very model it sought to eliminate.
The Winners: Industry Super Funds
The reforms disproportionately benefit industry super funds like ART and AustralianSuper, which dominate the sector with their marketing power and member retention strategies. Allowing NCAs to provide scoped advice tied to in-house products under collective charging creates a significant competitive edge. These funds are essentially building a captive market, locking members into their ecosystem for life, under the guise of “member-focused” advice.
Even the government’s justification—citing the Retirement Income Covenant—fails to address the reality: the NCAs will primarily serve as conduits for steering members toward internal products rather than providing truly independent or innovative advice. Super funds, already criticised for governance issues and poor advice quality, now gain yet another mechanism to entrench their influence over the retirement savings of Australians.
The Losers: Consumers and Retail Super
Cullen and others highlight the chilling effect these reforms could have on innovation, particularly in the retail super sector. Without the ability to compete on a level playing field, retail funds will be forced to focus on fee-based advice models, which may deter members and stifle the development of new, competitive products. Consumers lose twice—first by subsidising a service they might not use and again by missing out on the benefits of innovation and competition.
The concern is exacerbated by the quality of advice currently offered by super funds. As noted by Super Consumers Australia (SCA), much of this advice is generic and fails to account for individual circumstances. From inadequate retirement planning to long delays in payouts like death benefits, the governance issues in super funds raise serious questions about their capacity to deliver meaningful advice under this new regime.
FAAA: Asleep at the Wheel
The Financial Advice Association of Australia (FAAA) continues to miss the mark, welcoming the reforms as a potential solution to adviser shortages without recognising the broader risks. Their endorsement of the NCA concept as a pathway to professionalism ignores the reality that NCAs will operate under vastly different standards and motivations than qualified independent advisers. This failure to engage with the deeper implications leaves the independent advice sector exposed to further marginalisation.
Unanswered Questions and a Lack of Transparency
The devil, as always, is in the details—or the lack thereof. Key questions remain unanswered:
Will NCAs be required to pass the adviser and ethics exams?
How will advice be recorded, and will the standards for NCAs differ from those of professional advisers?
Who will ultimately charge for advice—the NCA or the supervising licensee?
This ambiguity highlights the rushed and poorly thought-out nature of the reforms, with significant gaps in accountability and oversight. These unresolved issues further compound the risks of poor consumer outcomes and diminished trust in the advice profession.
A Captured Agenda
Minister Stephen Jones’ attempt to achieve “consensus” appears less about creating a fair system and more about advancing the agenda of the most powerful players in the sector. The industry super funds, already enjoying unparalleled dominance, are the clear beneficiaries, while retail super, independent advisers, and consumers are left to bear the cost.
The Bigger Picture: A Sector War
This isn’t just a reform package; it’s a sector war. On one side are the industry super funds, armed with government support and a new model that consolidates their influence. On the other are retail funds and independent advisers, struggling to compete in an increasingly uneven marketplace. Consumers are caught in the crossfire, facing limited choice, higher costs, and declining access to truly independent advice.
The reforms represent a critical inflection point. Unless the profession, regulators, and consumer groups push back, the government risks entrenching a monopolistic model of financial advice that prioritises the interests of industry super funds over those of Australians seeking genuine financial guidance. This is not advice reform—it is a power grab disguised as progress.
All valid points Peter. The facts are that unions and industry funds with power and lots of money control the rhetoric with Labor & the FAAA stands to benefit with a new class of membership so here comes the new world ready or not…!
Perhaps we could start a campaign encouraging all those industry fund members who have never received advice to lodge a formal complain about the ongoing advice fee they are being charged & fees for no service & demanding recompense. There are millions of them. One way of getting the regulators attention.
Regulators go after Industry Super?
Like “Compare the Pair?”