Speaking on a live ifa webcast last week, Bryan Ashenden, head of financial literacy and advocacy at BT Financial Group, said if the government heeds the Quality of Advice Review’s (QAR) recommendations regarding superannuation funds and the good advice duty, the demand for holistic advice provided by a financial adviser could increase.
Mr Ashenden assessed that not only will the good advice duty — which requires non-relevant providers who provide personal advice to give good advice — uplift the quality of advice being offered by call centres, it could also encourage Australians to seek broader advice.
“If you do have someone ringing the superannuation fund as an example, and we have what will now be personal advice being given because it’s probably hard to see how it won’t ever be personal advice. If it’s got to be fit for purpose and all of a sudden, the customer, the client or the member is asking some questions about, well, what about other superannuation funds? Should I explore those?
“If we’ve got the rules in place that operate to say that if it’s intra-fund advice you can only talk about that fund, then really, we’ve got that automatic obligation that says to the person working in that call centre that you actually have to tell the member they need to go and speak to someone else because if they want to look broader, it’s not something that we can do through this particular offer. You need to go and speak with a relevant provider, with a financial adviser,” Mr Ashenden explained.
He noted that advisers are generally not opposed to the intra-fund advice model, as it is often not economically viable for them to provide new clients with advice that is really specific to their existing superannuation fund.
Moreover, he noted that getting this intra-fund advice could also actually lead to more Australians expanding their horizons beyond their super fund.
“I think many advisers, again, we’ve spoken to, they’re not opposed to that intra-fund side of things because particularly I think, when it’s a new client coming in, often it doesn’t make economical sense for a financial adviser to pick up and deal with a new client if it’s going to be just some small specific matters that might be constrained to their existing superannuation fund,” Mr Ashenden said.
“If that then starts to encourage more people to seek broader advice, then that’s going to be the next round of clients for advice to actually pick up and start serving,” he added.
Moreover, also speaking on the ifa webcast, researcher and speaker Dr Katherine Hunt added that another benefit to an increase in intra-fund advice is that it could lead to call centre staff eventually transitioning to full-service advisers.
“The current advisers, the 16,000 advisers that we’ve got are the creme de la crème,” Dr Hunt said.
“They’re already giving amazing personal financial advice. We see that day in, day out.
“The interesting thing I think is the new wave of advisers who are going to come through in the super funds and the product providers.”
Also speaking on the webcast, QAR lead Michelle Levy explained that there is currently a conflict between superannuation funds’ duty to act in the best interests of the members as a collective, and the duty to act in the best interests of individual members.
To fix this, she suggested the introduction of a duty to give good advice, which she said, “does not mean ‘okay advice’ or ‘good enough’ advice — it means what it says”.
If you missed out and would like to tune in to the webcast, click here and register for free.
General good advice is not always in a person’s best interests. This article is poorly articulated with weak arguments