Superannuation members will be able to access affordable financial advice from their funds under changes floated by the Labor government.
Financial Services Minister Stephen Jones told the Association of Superannuation Funds of Australia on Tuesday he will introduce legislation later this year or in early 2024 that will make it cheaper and less risky for them to provide more advice to their members.
“Superannuation funds must play an expanded and more effective role that serves the needs of their members,” Mr Jones told the super executives.
Mr Jones said super members were missing out on social security entitlements and other benefits because they weren’t getting financial advice ahead of retirement.
Only 26 per cent of individuals closing in on retirement were seeking financial advice, Mr Jones said.
Super funds are required to put in place a retirement strategy for members but a second set of rules makes it “almost impossible” for them to provide that information and advice.
“We want to ensure that we make some cautious, careful but targeted adjustments to those rules so the funds can give appropriate information and advice to their members,” Mr Jones told ABC Radio.
Improving access for super fund members is one of several ways Mr Jones wants to close the “advice gap”.
Much-needed changes in the financial services industry have triggered an “exodus” of more than 10,000 advisers since 2019, shrinking the pool of expertise and driving up the cost of the service.
“While the reforms have been effective in protecting Australians from bad advice, it has also shielded them from helpful advice,” Mr Jones said.
He said the lack of advice was prompting people to turn to “finfluencers”, unlicensed online services and scammers.
“Getting more professional advisers, qualified and into the practice is important,” Mr Jones said.
The government plans to accept 14 of the 22 recommendations in the Quality of Advice review chaired by Allens partner Michelle Levy.
The review, launched by the former Coalition government, was handed down in December 2022 and identified a range of barriers stopping consumers from accessing affordable advice.
Cutting unnecessary paperwork for financial advisers, which also drives up the cost of the service, is also on Mr Jones’ agenda.
The government will investigate an expanded role for other institutions, including banks and insurers, but Mr Jones said it was a lower priority.
“I’m just not compelled that the same urgency exists in these other spaces,” he said.
Support for reform
Industry Super Australia CEO Bernie Dean said a super fund was the first call for many members when seeking information or advice on their upcoming retirement.
“Empowering funds to provide relevant information – like family member pension eligibility and tax obligations is a sensible step that will help members,” Mr Dean said.
The Australian Institute of Superannuation Trustees welcomed the reforms, with AIST CEO Eva Scheerlinck saying the changes would help to make advice more accessible and affordable while ensuring consumers continued to be protected from harm.
“Although consumers are better protected than previously due to a range of reforms in recent years, it is the quality of the advice that makes the biggest financial difference to super fund members,” Ms Scheerlinck said.
Alan Kirkland, CEO of consumer group CHOICE, described the government’s approach to financial advice as “sensible and measured”.
“If designed correctly, these reforms will meaningfully improve access to advice, without watering down important consumer protections,” Mr Kirkland said.
“The recommendations that would have slashed consumer protections for advice provided by banks, insurers and fund managers were criticised by a broad range of stakeholders, including academics and independent financial advisers. The government has not accepted any of those recommendations at this stage,” he said.
Self Managed Super Fund Association CEO Peter Burgess said Australian super members needed sound advice now more than ever.
“As the minister rightly said, at the very time that Australians have more savings, advice on how to make those savings work for them in retirement has never been harder to get, and we think these reforms will help address this pressing issue,” Mr Burgess said.
The New Daily is owned by Industry Super Holdings
– with AAP
