Letting super funds provide advice is a ‘good starting place’

One of the recommendations of the final Quality of Advice Review (QAR) was to allow super fund trustees to provide personal advice to their members about their interests in the fund, including when they are transitioning to retirement.

Financial Services Minister Stephen Jones MP unveiled the government’s response to the QAR in June. Part of the response was a section termed “expanding access to retirement income advice,” which proposed to allow super funds to broaden their advisory offerings, with the government set to eliminate restrictions on collective charging of members for advice.

Mr Barrett suggested that permitting super funds to offer basic advice may incentivise Australians who currently abstain from seeking advice due to financial constraints and the shortage of available advisers to finally access advisory services.

“The proposal suggests that institutions, including super funds, could provide simple advice to solve the problem,” he told SMSF Adviser.

Recent research revealed that around 64 per cent of Australians approaching retirement would like to receive advice from their super fund.

Furthermore, digital advice platform Otivo’s Superannuation Report 2023 showed that 86 per cent of the 2,000 Australians surveyed want their super fund to offer financial advice.

“You’ve always got to remember what problem this proposal is trying to solve. We’ve got far more Australians who need financial advice than can possibly receive it with the current structure of the financial advice industry. There has to be an increase in supply.”

If this proposal is legislated, Mr Barrett noted, it would be difficult for advisers who provide advice on simple financial matters to justify charging a fee for it.

“As a result, advisers who want to charge for advice will have to move up the value chain in terms of the types of advice they provide their clients,” he said.

“Institutions like super funds will provide simple advice. I think it’ll be very difficult for advisers on the financial adviser register who are authorised to provide personal advice to charge clients with simple financial needs. Clients can just access the advice from their super fund.”

Advisers would have to offer services with more value-add in a post-QAR world, Mr Barrett suggested.

For example, while super funds could advise clients with just a house, personal savings, and a superannuation account, it would be difficult for them to advise clients with complex structures in place without feeling like they’re breaching their duties.

Clients would continue to turn to financial advisers who charge a fee for their services to assist with complex structures, Mr Barrett said.

As for how advisers could navigate these potential changes, Mr Barrett said the function of his team is to relay changes to financial advisers.

“One of the messages I’ve been trying to pass on to audiences around these changes is that they should have the same mindsets we do,” he said.

“The value of a client’s relationship with an adviser is at its greatest when there are legislative changes, or disruption in the market and economy because that’s when clients need their advisers the most. Advisers should embrace change because that’s when they add value.”

Commenting on Macquarie Bank’s partnership with this year’s SMSF Adviser Technical Strategy Day, Olivia McArdle, head of payment and deposits said: “Macquarie is a long-term supporter of the SMSF industry, and our Cash Management Account is the chosen SMSF bank account for close to one-in-three SMSFs. We’re committed to working with SMSF Adviser and sponsoring these industry events to ensure SMSF professionals and trustees can access the insights and education they need to get ahead.”

To receive updates on the SMSF landscape and hear from a range of technical speakers about the latest strategies SMSF clients could implement, come along to the SMSF Adviser Technical Strategy Day 2023.

It will be held on Wednesday, 25 October at the Grand Hyatt, Melbourne.

Click here to book your tickets so you don’t miss out!

For more information, including agenda and speakers, click here.

The Macquarie Cash Management Account is a deposit product issued by Macquarie Bank Limited ABN 46 008 583 542 AFSL 237502. This information doesn’t take into account any person’s objectives, financial situation or needs. Consider the Product Disclosure Statement or other applicable offer document(s) available on the Macquarie website to decide if our products are right for you and whether you should acquire or continue to hold a product. Target Market Determinations are available at macquarie.com.au/TMD.