Speaking at an Industry Super Australia event, Financial Services Minister, Stephen Jones, gave a firm indication that he is leaning towards heeding Michelle Levy’s recommendation to bring back superannuation funds to financial advice.
“There are 16,000 licenced financial advisers in the country, so the numbers don’t square. So, we’ve got to find a way to deliver information and advice to members who are approaching retirement,” Mr Jones said.
“Whether you like it or not, one of the first phone numbers that they call is their superannuation fund. At the moment, law that has been passed by the previous parliaments, supported by me, puts an obligation on funds to put in place a strategy for their members for their retirement phase. And at the very same moment, we put in all of these obstacles, which make it almost impossible for the funds to do anything about that. So, I’m keen on squaring that off,” he explained.
As part of the Quality of Advice Review (QAR), the reviewer, Ms Levy, recommended the removal of obstacles that prevent super funds from providing more retirement advice to their members.
Addressing the QAR on Thursday, Mr Jones said that the government is “looking at it” alongside other recommendations, and hinted at an imminent announcement on the matter of super funds.
“Five million people are at or near retirement. They need access to information. They need access to advice. They go to their superannuation funds and their superannuation funds send them away. The existing rules make it difficult for funds to even ask some pretty basic questions and provide some pretty basic information,” Mr Jones said.
“The government will be considering some recommendations very, very soon on that, not of the review but of myself and bringing in a bunch of other things that we’ve been looking at and working on. So, I hope to be in a position in the near future to provide a formal response on some of these things,” the Minister confirmed.
Moreover, he reiterated that the government understands the issue at hand and firmly believes that maintaining the status quo would not resolve it.
“We just think Australians have got to have access to better info and advice,” he said.
“One small example of why, if you’re in the accumulation phase, you pay 15 per cent tax, if you’re in pension phase, you pay 0 per cent up to your pension cap. There is an extraordinary number of Australians over the age of 65 within active accounts that are still in accumulation phase. That’s good for the tax revenue of the country, but it’s not necessarily in the best interest of that individual and there might be a reason, but I suspect that one of the reasons that they’re still in the accumulation phase is that they have had no information or advice which tells them how they can make that money work better for them and go further in retirement.
“And I think there are really simple things we should be able to do to meet that objective of retirement income.”
Last month, Minister Jones acknowledged that he was seriously considering allowing entities other than relevant providers — professional advisers currently registered as such — to provide advice. Responding to his announcement at the time, Ms Levy said she was disappointed by what was implied.
Namely, Ms Levy’s recommendation for the return of super funds to advice also included the banks and insurers.
“I am worried he may introduce them for super funds and not also banks and insurers,” the QAR lead said.
“This I think is because super funds have a duty to act in the best interests of members. I do not think there should be different treatment across them.”
Independent financial advisers have been heavily critical of the idea that funds could be given the green light to enter the financial advice industry in a more prominent capacity.
How about we just remove product issuers from the advice space and let professional financial advisers provide advice. If product salespeople want to sell their products, that’s fine too, as long as they are not using the guise of providing financial advice.
If I go to NAB for a home loan I only expect to get sold a NAB home loan. If I go to Toyota for a car I only expect a Toyota, not independent professional transport advice.
Financial Advisers by their nature should be independent and not aligned or remunerated by a product issuer. Those that are aligned or remunerated by product issuers are salespeople, not financial advisers.
Financial advisers aren’t sales people? Please. The only ones that aren’t are the unsuccessful ones..
What does the FP profession expect? For years now prominent advisers and associations have been screeching that they will only serve the rich, won’t touch anyone with under $1m etc. Now they apparently want to work with the “average” person. As an adviser that works pretty much only with “average” people I know the answer to this, but there’s not enough money in it for the “elite” advisers. Just let authorised advisers provide certain limited advice to people regarding their super under the same rules the super funds will be able to. Simples. Maybe some of us “low end” advisers will even do it for free if the red tape is removed from such basic advice.
It is what I expected. Minister Jones speaks with forked tongue. Industry funds to be the recipients of favours from the labor people as it is their baby.
The reality as everyone knows, is that the Govt. and Treasury have created the regulatory mess over the last 20 years, that has compounded every year. Now they want to try and fix the shortfall that they created in the advice space with carveouts to fill a perceived gap, without actually fixing the underlying cause. Until an actual adviser board for the Advice Industry is created to regulate the Industry, the same issues with conflicts, fees, regulation and red tape will keep preventing this Industry from becoming a true profession. The Govt. and Treasury have failed the advice Industry badly over a long period of time. Time to hand it over to professionals more capable.
Lets all return to a tied & employed Adviser model where the Adviser is paid a salary & bonus structure and only represents one fund manager or super fund only & quite obviously according to Mr Jones’ rules, not be subject to Best Interest Duty.
What an absolute debacle this whole industry has turned out to be.
It has been hijacked by righteous ideologues…
Why not losen the regulatory noose around advisers heads first? We havent even tested how many people advisers can serve, independently and with BID in tack. Before jumping the gun and allowing unlicensed and vertically integrated sales people provide “advice” to the broader community (industry funds, banks), is the priority not to make advice simpler for advisers first?? The rules of the game should be equal for all participants. The fact that Labour were willing to accpt Hayne BRC recommendations before they were even released, and then defer all rcommendations of the QAR speaks volumes of their hipocrasy.
Why not make financial advice tax deductible up to a certain annual limit? This addresses the issue of affordability without needing to bring back the bad old days of banks and industry funds.
Absolutely agree 100% as a great proposal. Only problem is that this has been mentioned many times over the last 20 years and the Govt. has never listened or shown any interest. At the end of the day, we can’t even get a lil’ red tape reduction let alone something as significant as tax deductibility. Nice dream but more likely to see pigs fly first.
Are the Banks and Indistry super funds Vertically Intergrated? Asking for a friend?
sadly the consumer will be given no advise but just told to draw pension – most clients have no idea
Industry Funds – equals Ex ALP Chairmans – Donations to Unions – to ALP
Just goes to show how out depth they are. So Mr Jones, how does an advisor adhere to the best interest duties when they represent a super fund?
I believe the answer is they don’t.
Love to see industry fund so called “advisors” SOA’ s comparing/recommending alternative super and other product if in best interest of client, call it for what it is, vertical integration to flog a financial
Product, think we have been here before…..
So can I assume that RoA’s will be out the window ?
Isn’t this how we got into a royal commission in the first place, good to see he is helping out the industry super funds but cant even comment on the Quality of Advice Review
Typical couldnt expect anything better from Labor, its all about the Union Industry funds
So everything else is kick the can down the road, but anything to help the unions is full steam ahead.
Typical.
what the bigman says in comment below i second this – honestly guys are we really surprised !!! Industry Super = Trade Union = Labor … I can assure you Stephen Jones has one agenda – and our interests are not in that agenda.
Why is everyone so surprised? Both sides of politics clearly want those pesky adviser out of the road. Liberals supporting their banker mates and Labour supporting the union/super buddies. Nobody supporting the poor old adviser unfortunately. Just have a look at our new merged association as an example. Nowhere in the new name does it say it actually represents the “adviser”. “Speech bubbles” as part of the new logo representing every conflicted group except advisers! that shows exactly where this industry is at. Find another job.
The more things change, the more they stay the same…
and here come the carve outs…
Surprise , Surprise. I told you not to believe in Stephen Jones.
I have just helped two soon to be retirees restructure their super with their partner so the eldest can get the full aged pension. Will Industry funds do this, or will they just help their client rollover to a ABP without worrying what the consequences are?
And charged them $10,000 each for the plan no doubt.
Actually no Ben. The cost to them was $3,300 for the plan and less than $1,000 to implement. His aged pension will be $8k a year more than he would ahve got. He is more than happy.
This just proves that you cannot trust a single person in a Government position of authority – they all just say one thing and do another.
I, and many other Industry colleagues have lost all hope of the Govt. listening to the adviser community, let alone take action and help us. It is always the same rhetoric from the same Govt. power players, just different names. Around and around with not an inkling of any consideration for the destruction caused by appalling legislation over the last 20 years.
“Whether you like it or not, one of the first phone numbers that they call is their superannuation fund.”…and on that phone will be a someone under immense sales pressure to sell Super and only super, no responsibility, no education, no requirement to act in the clients best interest.
AFR June 3rd 2022 – “Labor to clean up financial advice ‘hot mess’ – New Financial Services Minister Stephen Jones says he will prioritise easing the regulatory burden on financial advisers within three months, to stop the exodus of professionals and make advice more affordable for consumers.”
“Whether you like it or not, one of the first phone numbers that they call is their superannuation fund. At the moment, law that has been passed by the previous parliaments, supported by me, puts an obligation on funds to put in place a
strategy for their members for their retirement phase. And at the very same moment, we put in all of these obstacles, which make it almost impossible for the funds to do anything about that. So, I’m keen on squaring that off,” he explained.
Wow – the cherry picking is plain for all to see.
Given that we have already waited over 12 months plus for the QAR, and MP Stephen Jones election platform was to fix the ‘hot mess’, no need to rush the red-tape burden and the education pathway Minister Jones.
I know this article is about super funds and advice however I’m concerned and compelled yet again to scream “what about risk specialists and risk advise outside of super”. Rarely do IFA cover this and most other FP papers don’t either. Everything seems to hinge around[i] ‘investment’ [/i]advice when putting a foundation under it all with [b]properly [/b]configured insurance is arguably even more important. Centrepoint Tower on the sands of Bondi beach anyone? Where is the consistent and comprehensive coverage of this?
Goodbye Labor
At the very least, Minister Jones needs to be publicly held to account by the advice community as to why he has not prioritised the unwinding of adviser red tape over carve-outs for Industry Super.
What is he bringing back? They are already providing advice.
ANyway, not surprise this would be his first move. Look after your paymasters first.
It just means they can now say then are giving advice rather than the current position where it is “general advice” but is done after the completion of the equivalent of a fact find.
“There are 16,000 licensed financial advisers in the country, so the numbers don’t square. So, we’ve got to find a way to deliver information and advice to members who are approaching retirement,” Mr Jones said.”
Errr, why not actually promote and incentivise people to either join or return to the financial planning industry. At least then you have qualified professionals providing advice, rather than uneducated, conflicted call centres.
5 million people looking for advice, is 300 clients each. If some of the regs are relaxed so planners can operate efficiently then it should be no problem, and if there are more advisers then it should be even easier. It’s funny how this was never an issue previously and was not an issue as they watched half the financial planners leave the industry.
don’t forget only a small percentage get advice in the first place so this 5 millions is more likely 2.5 million that will seek advice
Is anyone really surprised? Very quick to support the union funds but not the profession!
the union funds just want to set up account-based pensions with their existing members, without having to do SoAs.
And most financial advisers want to set up Account Based Pensions through a wrap account and would like not to have to do SoAs. If it’s ok for Industry funds allow advisers to do the same!
You have hit the nail on the head. Remove the SOA, and it allows this proposal to happen..
Sensible outcome – far too many people requiring non-complex advice over the next decade or so for current advisers to handle.
100%. Why are advisers threatened? Godo advisers aren’t playing in this space so this is not a threat of competition. It’s a solution to a gap in the market.
Well for one thing it is conflicted advice from a vertical integrated Institution and given the RC findings on the back of conflicted vertical integration, then this proposal just reverts back to the same problem.
Secondly, it is no different to fee for no service as non-advised members are subsidising advised members. How can this type of advice be professional with those massive conflicts?
There are huge gaps in the legal profession for affordable advice – is the Govt. willing to provide the same advice carve outs for the legal Industry???
They aren’t providing advice because of the suffocating compliance. Relax that, and build the number of advisers and there is no problem.
Charge members ongoing for non-complex advice – seriously? If the advice is so simple, simply charge the member who seeks this advice.
Mr Jones, don’t forget some guidelines around fair competition and appropriate responsible advice = there should be full public disclosure about any conflict of interest (product or intra fund commission), and that the advice can be limited in nature (eg Centrelink, tax or estate planning for example).
On that basis, Jones is completely conflicted.
Ha ha but seriously how big is the vertical conflict
I’m, Shocked Shocked! Well not that shocked…
I was hoping when the ALP came to power that it was an opportunity for them to show the advice profession that they can serve without bias towards industry super.. If this article is correct, and they are preparing an imminent announcement to address super funds needs over advisers, yet are unable to address basic needs adviser outlined in the QAR. it is evident they are self serving the hand that feeds them and we have no hope of impartial politics. The Libs have stuffed advice, and the ALP will only drive the thumb into the wound. The question is, why continue in this over regulated world when there are far easier, and more lucrative business opportunities to be had…
I have also done the maths and with so many unadvised members perhaps the super funds could first look at recruiting former advisers with many being ready, willing and able to provide information and advice to their members under the soon to be announced relaxed rules?
Existing advisers could managed all – just reduce red tape on qualified Financial Planners – but would that suit Industry Super?
No surprises here. We always knew that would happen because it’s what the unions and industry super funds want. As for the rest of the Levy recommendations, Minister Jones is still waiting to see if those unions and industry funds will allow any other rules to be relaxed. And they are in no hurry to decide because it won’t benefit them. The longer all the over-regulation of advisers continues the better for them.
Let’s clear the obstacles for Industry Super who pay our bills and pretend we’re going to do something to help independent advisers. They dont even try to hide it.
Sounds like Minister Jones is giving advice. Is he licensed to do that? or is it factual information. Has he considered all of the relevant information of all of those older Australians? Oh to be a politician and have an opinion on everything but responsible for none of it or the consequences of their actions.
Maybe whatever rules apply for superannuation funds should apply to all advisers. If you are only providing intrafund and strategy advice (not switching products) then the same rules should apply to all. Unless I know a fund is completely unsuitable for a client to meet their needs then I would almost consider myself fund agnostic. The example given in the article is strategy and nothing to do with product.
I think I’m going insane. Seriously !?
How about you allow financial advisers to get paid? If the client can’t put their hand in their pocket and pull out a few thousand dollars for advice, how about we, say, let the financial adviser be paid through the product? Hey Presto! And we’re back in 2010 when people on low incomes could access financial advice!
I’m not sure how having the product providers/creators also provide the strategic advice will result in positive outcomes. With higher education standard and barriers to entry, the compliance burden should drop off, freeing up time for everyone and advisers can service more clients. The cost will have been reduced and you have as agents acting for clients which are as independent as you will probably ever get.
This is all part of the hand shake deal for Industry funds to support the Federal Government affordable houseing plans. They need the industry funds to invest in their plans.
Don’t forget there are scores of public accountants that are qualified to provide independent advice on super, they already provide tax advice on super products!!!
.
Lol..
Ive spent years fixing “advice” provided by accountants. Stay in your lane and we will stay in ours.
Yes, let’s recommend SMSFs to everyone!! Doesn’t matter the amount – just as long as we get to charge every year for preparing the fund financials and doing the audit!
Giving everyone an SMSF doesn’t count as independent advice. Lost count of the number of unnecessary SMSF’s that have been recommended.
So Mr Jones, I can ask my super fund is their a better/cheaper fund for my needs and I will get a quality, impartial, unbiased answer?
Will this apply to Accountants for SMSFs, as well?
As was always the intention. Clear the decks for the industry funds. This has been achieved by through the destruction of hundreds of small financial advisory practices through the impost of regulation that doesn’t apply to Industry Super Funds.
And with this confirmation from Minister Jones, it also makes it blatantly clear that the Govt. have never placed any priority on the massive impost of advisers and their practices. Same old same old…