Following the government accepting in principle the Quality of Advice Review’s recommendation to allow super funds to provide members with advice, Financial Services Minister Stephen Jones said there aren’t enough financial advisers to give the right kind of advice, reiterating his support of super funds as a “likely candidate” to fill that gap.
Speaking on the ifa podcast, Lifespan Financial Planning chief executive Eugene Ardino said it’s not all positive for super funds wanting to expand their advice offering.
“What’s been proposed is to have unqualified people that are employed by a licensee or a super fund, which has an AFSL, to be able to give personal advice so long as they don’t charge for it, as opposed to those same sorts of people being able to give general advice,” Mr Ardino said.
“Now, the trade-off is they’ll be able to give more advice, but they’ll be held to a much higher standard than they currently are giving general advice. And that higher standard would be the so-called good advice duty.”
According to Mr Ardino, this is not going to be an easily implemented change.
“The reason that’s going to take a bit longer, I think, is because we need to define what good advice means,” he said.
“That was never going to be simple, particularly if you want to create what is more a principles-based framework than a safe harbour-type framework with boxes that you can tick, which is what I think Quality of Advice Review is trying to get away from.
“So that was either going to be simple, but you’ve got a trade-off where you’re going to have unqualified people to be able to give personal advice, but they’re going to be held, and their licensee, and their employer will be held, at a much higher standard.”
The licensee boss added that, ultimately, he sees an expansion of access to advice as a positive.
“I’ve been back and forth as to how I feel about it and I think probably overall, it’s a good thing because it enables some advice that consumers aren’t going to be able to get under the current framework,” he said.
“It enables that advice to be given by those product providers, whether they’re super funds or other product providers.
“It’s not going to be perfect. There’ll be problems as there always are, but I’m for more people getting advice, getting access to it even if it’s very basic. I also feel that perhaps what needed a bit more work was perhaps restricting the sort of advice that those unqualified people can give.
“Under the current proposal, basically, they can give any advice provided they don’t charge a fee for it, which I think, perhaps there needs to be more restrictions around that and that would perhaps make government and industry a little bit more comfortable.”
To hear more from Eugene Ardino, tune in here.
The honest unspoken goal for super funds in providing unpaid advice is member retention and acquisition. On the hand super funds PR and lobbying is based on grandiose social benefits, at the cost of actual financial advisers being held to royal commission standards. I guess the means justify the ends.
Think about this – they (certain Super Funds) seem to needs this type of regulator/legal advantage to compete and survive against Financial Planner operating in a free market – perhaps they know they just can’t compete long-term in a free market? Perhaps let them have the small accounts – just take 20% of the members from them – who are very likely to have 80% of the $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$. Then I guess ASIC will find a way?