Earlier this week, Financial Services Minister Stephen Jones threw his support behind the expansion of superannuation funds’ advisory services and expressed confidence in their ability to effectively cater to the diverse needs of their members.
Speaking to a small audience of super fund CEOs and senior executives at an event hosted by ASFA, Mr Jones said funds “must play” an expanded and more effective role that serves the needs of their members.
“In fact, government has already told them they need to do more,” the minister said.
While Mr Jones appeared to heed the Quality of Advice Review’s (QAR) recommendation six, which proposes amendments to restrictions on collective charging to allow funds to provide more retirement advice and information to their members, his enthusiasm waned when it came to recommendations aimed at ensuring the delivery of “good advice” by these funds.
Moreover, he temporarily brushed aside the QAR’s proposal to extend the invitation for banks and insurers.
Critics are now suggesting that Mr Jones’ understanding of the advice industry appears limited, pointing out that funds alone cannot bridge the gaping advice gap in Australia — one that has become particularly pressing in recent years with a loss of 40 per cent of advisers.
Namely, in a LinkedIn post this week, Adele Martin, the founder of My Money Buddy and The Savings Squad podcast, took aim at the minister and his choice of venue for the delivery of the government’s QAR response.
“The fact that the Quality of Advice reforms were delivered to the Association of Superannuation Funds confirms to me that politicians think financial advice is just superannuation,” Ms Martin wrote.
“And that is exactly why more Australians don’t seek financial advice. Financial advice is much more than superannuation.”
Ms Martin’s post gained a lot of support among advisers, with many agreeing that financial advice extends well beyond super.
In its response to the QAR, the Financial Services Council (FSC) presented a similar argument. It cautioned that the government is “at risk” of “unnecessarily restricting” access to advice if it only heeds the QAR recommendation regarding funds and leaves out the banks and other institutions.
“Superannuation funds will play an important role in providing retirement advice, however, if the government narrowly implements key reforms, they could fail to attract the industry investment that is necessary to deliver quality advice to the millions of Australians that would benefit from it at different stages of life,” said chief executive officer of the FSC, Blake Briggs.
The notion of “stages of life” has become a common argument among advisers, who insist that Millennials, in particular, are currently less focused on retirement and may remain locked out of advice under the government’s proposed model.
Speaking on a recent ifa podcast, Ms Martin argued that younger generations “don’t care about their retirement”.
“Someone in their thirties or even early forties does not care about retirement.
“They want to create a life that they don’t want to retire from. They don’t want to work for 40 years, slug it out 50 hours a week, they want to create a life where they can work three days a week, where they can do months travel,” said Ms Martin.
However, according to Mr Jones, access to advice from a superannuation fund is vital for 5 million Australians approaching retirement.
Advocating for the expanded involvement of super funds in financial advice, Mr Jones highlighted that the current count of less than 16,000 financial advisers cannot meet the demands of that pool of Australians.
“But even if we doubled the number of financial advisers — which is not realistic — it still won’t be enough,” he said.
“The math does not check out”.
However, the question remains, what about the millions of individuals who are not yet nearing retirement?
Just to make matters worse for those that do the math, rumour has it that the actual number of face-to-face financial planners is closer to 12,000.
how many people work in super fund call centers to help 5 million? number are non existence so the math does not check out because it hasn’t been done.
Is Adele a Financial Advisor ?
The last sentence is getting close to the real problem – and the opportunity. The core issue is not ‘my retirement’, it’s ‘the rest of my life’. Until we focus people on their journey, not one event in it, the best for each person may elude
them and remain a problem for their range of advisers – including health, financial, aged care, estate planning.
It’s easy to start the conversation if we use time – ‘how long am I planning for, why and what could I do about it’ Immediately we can choose whether to act and how. ‘What will I do and where’ is a natural step. Resolving ‘who can speak for me if I can’t’ protects assets and families increasingly strongly from midlife. These are all key elements of online longevity planning, which also introduces later life issues and actions. Properly worked through, online longevity planning also brings intergenerational issues into focus for both parties. Once in place, it is easily adapted to frame changing circumstances.
Super funds are clearly well placed to address these issues online and early with their members (and their partners) to substantiate their ‘whole of life’ interest. Adding online financial advice becomes more feasible – and other services too. Longevity planning invites member commitment, not just consent.
Confining the discussion and scope of engagement to retirement and financial issues overlooks how things are changing.
Who is really valuing superannuation fund assets? When a superfund Director is the lead chairperson of the group that supposedly values their unlisted assets, how do you know it’s not biased valuation. Also with superfunds demanding banks not lend to fossil fuel using companies/investments, is this only because they have over committed to renewables which can’t compete without gov’t handouts or benefactors with deep pockets. This push to superfunds is highly questionable.