You’ll soon be able to get financial advice from your superannuation fund, but what does this mean for your current plan?
For decades, the role of superannuation funds has been to manage and grow our hard-earned retirement savings. Now, with recent announcements from the Albanese government, there’s a significant shift on the horizon.
Financial Services Minister Stephen Jones stated the Government intends to position superannuation funds as a source for financial advice, particularly around retirement.
But why are they doing this, and what does it mean for you?
The backstory to this change and the role of super funds
In December 2022, the Quality of Advice Review (QAR) final report was published. The QAR was deemed necessary to remediate the regulation of financial product advice that focuses on providers and not consumers — its purpose was to improve the accessibility and affordability of quality financial advice for all Australians.
A key focus of the QAR was superannuation. At Green Associates, we know first-hand the importance of super — we see super being the most significant asset for many clients, and it’s why we give super advice in the context of retirement.
Yet, around us, financial planner numbers in Australia have dropped significantly by 10,000 since 2019. So, while the demand for advice has increased, supply has decreased. Meaning within the 5 million Australians either at or nearing retirement, many are navigating their financial futures without guidance.
Getting More People Advice On Retirement Incomes
Minister Jones highlighted, “The lack of advice and information around retirement incomes is clearly the biggest gap in the advice market”, and the recent recommendations are set to change this.
His remarks show the Government’s expectation that superannuation funds should actively offer advice to their members. This stance extends beyond the QAR’s initial recommendation, which suggested merely encouraging funds or adjusting regulatory frameworks to simplify the process for funds to provide advice if they opted to do so.
The reason for this push is to address the access and affordability issues.
Concerns and Considerations
Getting more people access to retirement advice is important; no argument there.
However, not everyone’s on board with this shift to enable super funds to provide personalised advice. Super Consumers Australia has apprehension over potential conflicts of interest, questioning the independence of the advice supplied by funds – as they may only recommend investment options and services they offer.
Similarly, the Financial Advice Association is left wondering if super fund advice providers will meet the stringent professional and ethical benchmarks that safeguard consumers when working with financial advisers and planners.
How does this affect me?
The legislation is, of course, not in its final state yet, and so we will definitely be keeping an eye out for more details.
Ultimately, the result of the change is that more Australians will be able to access retirement advice related to their super, and we are all for it. Many Australians will be looking at a retirement fuelled by a mix of government pensions and superannuation contributions. So for those thinking about retiring and whose needs are relatively straightforward, this will be an option for them. However, there are many people whose superannuation and retirement planning will be more complex and encompass a number of different assets and wealth strategies. This group may need to look beyond the advice provided by super funds to cover all their options and ensure they can have the lifestyle they deserve in their golden years.
At Green Associates, we believe personal advice should be backed by extensive experience and industry knowledge. If you are seeking tailored financial advice to feel confident about your finances and live how you want, now and in your retirement, please book an appointment with one of our financial planners.