The level of complexity in the system and the continued volatility in investment markets, where most of the risk sits with the individual member, are stressful for retirees, said SMSF Association chief executive John Maroney in an address to a Sydney event run by communications consultancy Pritchitt Partners.
“Although some longevity protection is provided by the Age Pension for those with modest assets at retirement, or at older ages, for many retirees it is very difficult to share or manage their retirement risks,” Mr Maroney said.
“For this reason alone, the association believes the future role of financial advice regulation is crucial. We believe that a more customer-centric advice framework is needed, where consumers can receive trusted and professional advice.
“Consumers want affordable advice, delivered with the help of sophisticated technology, via a system of open superannuation similar to the open banking environment with clear consumer data rights.”
Advice profession to resemble medical profession, says SMSFA
Mr Maroney said he expects market dynamics will continue to evolve and that the financial advice profession will gradually look more like a medical profession, where regular health checks can be undertaken using real-time data that is readily available for consumers and can be shared with their advisers.
“Efficient initial advice could be more like a half-hour discussion with a doctor reviewing the results of general blood tests and measurements of height, weight, blood pressure, family history, rather than requiring extensive manual data gathering and days of manual analysis and report preparation that is primarily focused on risk mitigation for advisers rather than value-adding for consumers,” Mr Maroney said.
However, Mr Maroney stressed that the SMSF Association does not want to reduce any consumer protections provided by the existing regulatory frameworks.
“However, we believe more effective regulation can be developed in practice and can be much better by focusing on what consumers really want and need. Mechanisms are needed whereby most Australians can have access to affordable advice with significant trust in the system,” he said.
“This will require continued advancements in technology, rebuilding in trust from all participants in the financial system and from focusing on what is in the best interest of the consumer in reality instead of theory. Protecting retirement savings and financial health of all Australians is at the forefront regardless of which forms of retirement savings are chosen.”
High hopes for Retirement Income Review
Finally, Mr Maroney said he has hopes that the Retirement Income Review will play a significant role in addressing these critical issues.
“Although the nature of the review is to develop a fact base and not a list of recommendations, the fact the panel has put a long list of important questions before the Australian community is an important step,” he said.
“Many of these questions have been asked from time to time over the past 30 years and we are still grappling as a community to provide answers to such basic questions as what is the goal of the retirement income system, including superannuation, age pension and voluntary savings, including home ownership.
“We are hopeful that the review will deal with these important questions by gathering an evidence base and providing projections, illustrations and options that will lead to a more informed community debate on important issues once it has been completed.”
This is what happens when the electorate blindly gets conned into additional regulatory “protection”. It is slowly dawning on retail investors that due to the out of control red tape, advice it is going to cost them a lot more. The other option is to join the new class of “untouchable” investors (that advisers cannot afford to support), forced to wing it down at Centrelink. Sooner or later a consumer revolt will come to wind back a lot of this ridiculous & unnecessary red tape, when they realise that FDS information is already provided by the fund managers in annual reports, and that they can “opt out” of advice fees whenever they like.
The only problem ( and i agree it will happen ) is by the time that the consumers could be bothered to revolt will it be to late. As humans they will only revolt when it directly effects them.
So retirees switching their life savings into industry super funds with 90% exposure to growth assets is not the solution ?
Dont worry. The Intra Fund Advice they have paid for is definitely in their Best Interests, even though it doesnt have to be.
The FASEA standard is the bare minimum standard. There should be no exemptions from the bare minimum standard.
Let’s hope we can avoid the political footballs that regularly mess with the minds of retirees and their advisers. I’d like to be able to just do my job for a fee that doesn’t put me out of reach of those who need me. Maybe I’m living in la-la land.
Imagine the effects on Advice access and cost from 20 years of EVER INCREASING REGULATION AND BS COMPLIANCE.
Who would have ever thought it would make it harder and more expensive to get Advice.
Wow like that was hard to see bloody Pollies
Well, that is what planners do, review and make strategic and asset allocation changes to aid longevity of retirement.
fund. Simple solution. Regular health checks as you state is the norm in most practices.
Yeah, but a doctor doesn’t spend the next 15 hours after seeing a patient gathering evidence on their file of things the patient could have but doesn’t have or doesn’t want treatment for, what they’ve told the patient, what they haven’t told the patient, then type up a 15,000 word document confirming all of this and then get the patient back in to explain what they’ve written in that document that had already been discussed and agreed at the first appointment, then gather some more evidence of what was discussed or not discussed at the 2nd appointment.
…or have to restudy their entire degree because the universities are going broke…
I think if Advisers were funded by a government system such as Medicare then all the red tape would disappear in a flash since the government would not want to pay the enormous cost to provide advice. But since they are not funding it nor even offering any concessions such as tax deductible advice, they will keep loading up the BS compliance to the nth degree and expect advisers to keep sucking up this cost. NOT FOR MUCH LONGER THOUGH AS THERE WONT BE AN ADVICE PROFESSION THE WAY THIS IS GOING.
And droves will leave the industry to become “Financial Coaches” as i have done and found it easier for clients and business while still providing the same (if not better as there are less restrictions) advice
This is the perfect solution to all this compliance and FASEA rubbish. Just become a financial coach and you can do exactly what you are doing now however you dont have to waste your time with compliance, licensing, Professional indemnity isurance etc. This is the way of the future for the financial advice industry.
In a recent Insurance underwriting online discussion forum, it was revealed that the file notes in Dr’s surgeries can be very light on. But they are “professionals”…lol