Super Consumers Australia has called for the Quality of Advice review to be amended to include a new model for advice for retirement income products.
In its submission on the Retirement Income Covenant, it said the covenant could lead to a large expansion of the range of retirement products available to people, despite the Retirement Income Review having found people battled significant complexity in retirement planning.
“This expansion of offerings is likely to increase complexity and without improved guidance is unlikely to translate into consumers taking up more appropriate offers,” the submission stated.
“At the moment it is very difficult to get independent strategic and product advice outside of paying for individual financial advice.”
If passed, the RIC would require superannuation funds to have a retirement income strategy for members.
“Individual advice will remain an important resource for some consumers to navigate the complexity of retirement planning, but it is not the solution for all,” the submission stated.
The Quality of Advice review was recommended for three years after the Royal Commission and draft terms of reference for the review would consider how the regulatory framework could improve the accessibility and affordability of advice delivery in Australia.
SCA director, Xavier O’Halloran, told Professional Planner the policy would work, pointing to the UK Money and Pension Service as example of an existing policy in place, as well as noting it was part of an industry wide consultation process.
“The Pension Wise service in the UK gives people access to free, impartial, specialised guidance – delivered face to face or over the phone – about their pension options,” the submission stated.
“It also provides a free, online tool to help people choose how to access their pension money, including a product comparison tool.”
Research from SCA found that about a quarter of pre-retirees looked to experts to help them with retirement planning.
“Around 37 per cent preferred to take on the task themselves, primarily due to a lack of trust in advisers and super funds to give them unbiased information,” O’Halloran said.
“As we start a new market of new retirement income products, it must be complemented with a new model to provide conflict free, affordable information and guidance at scale.
“One method to address this is to amend the Quality of Advice review draft terms of reference to examine how this could be achieved.”
In a submission to ASIC’s consultation on access to affordable advice from almost a year ago, SCA said tinkering with the existing regime to make it more commercially viable for industry participants would not solve the advice gap.
It noted that financial advice by superannuation funds was just as conflicted as it was outside of super, which meant it should be included in any review of advice.
