In a blog post, Deloitte partner Andrew Boal argued the need to make it easier for super funds to provide financial advice, something that is expected to be introduced with the Deliver Better Financial Outcomes (DBFO) reforms.
A fatal flaw in this plan, though, is the unknown delivery date for tranche two of the legislation, despite Financial Services Minister Stephen Jones stating it would be delivered over the second half of year.
However, with the timeline being repeatedly pushed back, any thoughts on this being delivered prior to next year’s federal elections are beginning to look like a pipe dream.
Boal explained that, under current regulations, it is rather costly for super funds to provide any form of advice while also remaining competitive within the market.
“One problem is that for super funds to provide financial advice at scale, they will need to introduce a hybrid model where advice is delivered digitally as well as in person. However, building these digitised financial advice businesses will take years and require substantial investment in digital technology and GenAI capabilities,” Boal said.
“This will be difficult for super funds to do at speed while also balancing industry consolidation, increasing competition, and ongoing political and regulatory pressures to keep fees low.”
He further argued that to truly close the advice gap, there needs to be a reduction in the overall regulatory barriers to make it easier for super funds to interact with members and provide basic product advice.
“For example, we believe there is an important distinction between financial advice and financial product advice, and this difference should be acknowledged within the regulatory framework, taking into account the likelihood and severity of any potential consumer harm,” Boal said.
“One area to highlight and consider further is the current hawking prohibition designed to protect consumers from unsolicited offers of financial products. How will superannuation funds be able to properly engage with its members about appropriate retirement strategies without considering the merits of its own retirement product?”
The problem of Australians accessing financial advice is also exacerbated by the limited number of advisers and the cost being higher than consumers are willing to pay.
According to Adviser Ratings’ Australian Advice Landscape report, while more than two-thirds (68 per cent) see the benefit of financial advice, consumers are only willing to pay an average of just $911. This is even lower among those not currently seeing an adviser, with this cohort willing to pay just $553.
Despite this, the report found that only 6 per cent of advisers have new client fees under $1,500.
Furthermore, the latest statistics from Wealth Data saw adviser numbers fall back below 15,500 to 15,485 despite the profession trying to regain some of their lost cohort over recent years.
In response to the advice profession’s struggles to serve more Australians at a more affordable price point, Boal said that regulation should “facilitate the provision of limited advice to address consumers’ occasional and specific needs” by super funds.
What regulatory pressure to keep fees low? Everything the ALP has done so far arguably increases costs.
Dear Deloitte- STAY in your lane
Just remove the red tape.
Problem fixed.
Why is this a problem ?
All this will cost money right? How about this for an idea – if the member needs advice, then the member can pay for that advice directly rather than allowing a product provider to be making these decisions and charging for advice which might not be needed?
Allow a Pr4oduct Provider to provide advice – what could possibly go wrong?
It is highly recommended that Deloitte remain completely & permanently silent regarding this matter.
Deloitte who are employed by super funds promote they are the answer obviously combined with more consultancy fees. Absolute drivel and gutter journalism with conflicted parties who are not interested in a fair solution for Australians. Conflicted vertically integrated rot
these backpackers and ex used car salesmen will ruin lives
The Chairman’s Lounge, by Joe Aston, proves that the decision-makers’ agenda is rarely visible to even their own complicit colleagues who are probably already busy feeding from the trough.
I’m a bit sick of the lies frankly, and even more sick of the media (including IFA) which are too weak to call them out. There are plenty of advisers in this country. 15,000+ is on par with the US on a per capita basis. If the higher education standards had been introduced alongside a relaxation in red-tape and a sensible Code of Ethics, there would not be any problem with consumers accessing financial advice, and the costs would be substantially lower.
Instead, these product floggers and their Canberra patsy’s are using these unchallenged lies to pave the way for a world in which product floggers will be using unqualified, biased employees to dish out financial advice to the unsuspecting public, with substantially fewer consumer protections. What a terrible outcome for the Australian public.
Nail on the head.
This is Big Super waffle. 10,000 retail advisers have been purposely wiped out through with the Annual Fee Renewal Red Tape (that doesn’t exist in any other nation on earth). If we went back to the previous system that exists in all other countries, retail advisers can provide low cost on-going service support once again. Time to end the unlevel playing field against retail advisers in Australia – enough is enough.
Exactly, the push to allow conflicted, vertically owned, single product only, BackPacker sales with reduced regulation will be a disaster.
How this can be looked at before Real Advisers are given a real chance and 70% of BS mass over regulation is removed. Then Real Advisers can service many, many more clients without the conflicts.
We should claw back the cost of the Royal Commission, given it hasn’t accomplished anything apart from wrecking our industry. Hayne and those peacock lawyers who were helping him out, need to pay back their fees to the taxpayer.
Yes, it’s like the laws are being written to advance the business interests of a certain class of Product Provider and eliminate all competition? How the Quality of Advice review became the Quantity of Advice review is also of some concern? Just makes one loss faith in the two major political parties.