To keep a level playing field, industry funds need to support the advice sector using ‘qualified advisers’, the Professional Planner Licensee Summit has heard.
AMP group executive for advice Matt Lawler told the summit that qualified advisers – which he referred to as “tier-two” advisers – could be utilised by practices to help close the retirement advice gap.
“The thing I ask from the industry funds is that we will argue that tier-two advisers should be available to practices. We would like you to support that,” Lawler said.
“If we can go in together as the one advice community – industry funds, retail funds, adviser networks – and say we think this is a good idea, it’s going to be hard to argue with.”
The second tier of adviser was introduced by Minister for Financial Services Stephen Jones at the end of 2023 as part of the government’s response to the Quality of Advice Review.
While it was once a much more contentious and adversarial dynamic than it is today, Lawler said the relationship between retail funds and industry funds was still “an elephant in the room” but is a gap that can be closed.
“In the Licensee [Leaders] Forum we have people from industry funds who are looking after the advice side of the business,” Lawler said.
“There’s a willing there to actually work together because advisers are open architecture now, they are going to be advising on industry funds.”
Australian Retirement Trust executive general manager – advice, guidance and education Anne Fuchs, whose fund relies on external adviser relationships, said licensees will succeed in future if they focus on the consumer.
“The average 40-year-old in Australia has $90,000 in superannuation, they should have $160,000 if they are going to retire comfortably,” Fuchs said.
“We have a lot of work [to do] and one in four Australians haven’t checked their balance in the last year. That’s a monstrous problem, but a monstrous opportunity for us.”
Fuchs said there’s a “strong desire” for everyone to work together to improve retirement outcomes, but it needs to be done with the Australian consumer in mind.
“It’s all well and good to help someone who is rich,” Fuchs said
“But isn’t [it a more] noble purpose that we can help more Australians actually make really choices about their precious retirement savings so they actually have a dignified retirement?”
How many advisers do we need?
A common theme throughout the summit was the number of professional advisers needed to solve the retirement gap, with Vanguard Australia managing director Daniel Shrimski referring to research commissioned from CoreData that found the industry needs almost 14,000 more advisers.
However, DASH Technology Group chair Geoff Lloyd said the industry can be too caught up in the specific number.
“I’m not sure why we want to argue whether 15,000 planners is the right number; I don’t know what the right number is,” Lloyd said.
“What I do know, though, is if you collaborate together and come out of this with a working group or an initiative you can all fund to actually build those pathways together, then you’re going to have the right number of advisers.”
Lloyd noted that the UK has 35,000 advisers despite having more the double the population of Australia.
“Why do we think we need a different number? What we definitely need is more people entering this profession,” Lloyd said.
The industry veteran – who was a former executive for BT, MLC Advice, and Perpetual, as well as chair of the FSC – noted the change from the product-led era he oversaw.
“We used to call it an industry, it’s now a profession,” Lloyd said.
“It’s in really great hands in this room. The one thing I’d ask you to take away is continue this collaboration.”
Steering into insurance
While much of the summit discussed the tailwinds for the advice sector Zurich Life Insurance head of retail Jacqui Lennon said the lack of insurance risk writers is “dire and getting worse”, noting research that found just a few hundred advisers are writing the majority of risk advice.
“We talk about getting people into [the Professional Year], great, but getting people into PY that want to be risk writers is virtually impossible,” Lennon said.
“We’ve convinced everyone that financial planning is a ‘finance bros’ sort of a career [but] in insurance it’s very much around personal health conversations, it’s about what would happen if you die.”
Lennon said risk writing requires a different set of skills and with the cost of the National Disability Insurance Scheme (NDIS) projected to continue to climb, having more life insurance coverage will take significant pressure off the system.
“When you look at the lack of insurance in the industry and the impact that’s going to have on society, on the NDIS, on taxes, pensions, we should all be very worried about that as taxpayers,” Lennon said.
“There’s a few hundred people that are generating more than half the inflows at the moment and that’s not sufficient, so how do we create different pathways, and what do those people look like?
“I don’t think they look like people that understand portfolio construction and derivatives, they probably look like teachers and nurses.”
