Funds embrace Jones’s QAR response, agree it will improve member outcomes

The minister announced the government plans to adopt 14 of the 22 recommendations made by the QAR in full or in principle, including the more contentious recommendation that will see superannuation funds expand their provision of advice.

Mr Jones confirmed he accepts in principle recommendation 6, which proposes amendments to restrictions on collective charging to allow superannuation funds to provide more retirement advice and information to their members.

However, the minister clarified that he would consult further on recommendations 1 to 4, with a view to implementing recommendation 6. These cover reviewer Michelle Levy’s proposals to broaden the definition of personal advice and to introduce a good advice duty, as well as the removal of the general advice warning.

Responding to Mr Jones’s announcement, ART chief executive officer Bernard Reilly said the reforms would ensure more Australians are accessing advice which, he noted, “has the power to materially change people’s lives”.

“These reforms will empower members to have greater choice in relation to how they access financial advice, whether that be through their super fund, digital channels or external financial advisers,” said Mr Reilly.

Speaking to ifa earlier this year, Anne Fuchs, ART’s head of advice, confirmed that the fund is already working on an “end-to-end digital advice platform” – encompassing calculators, DIY advice through and human-led intra-fund advice – which it plans to launch in the market by the end of next year.

The head of advice, however, emphasised at the time that ART values the significance of advisers and intends to incorporate the services of real advisers into its platform offering.

“The reality is the trustees need to be able to discharge their obligations thoroughly and to do that, comprehensive advice is a big part of that because people will have other income sources, other assets. That’s why comprehensive advice is needed,” Ms Fuchs said.

Also commenting on the minister’s announcement, AustralianSuper chief executive Paul Schroder said the adoption of recommendation 6 would simplify access to financial advice while making it cheaper for members within the context of appropriate consumer protections.

Mr Schroder hinted that AustralianSuper, too, would turn to digital solutions to help it make advice more widely accessible.

“Superannuation funds are the right vehicles for these reforms as there is already very strong legislation – governing fiduciary duty – in place to ensure funds such as AustralianSuper act in the best financial interests of members with the sole purpose of generating the best possible financial outcome for members in retirement,” Mr Schroder said.

“This is a positive step forward for millions of members as they will now be able to access the level of financial advice they require. The removal of barriers on the provision of digital advice is a game changer, whether that is simple guidance to assist members in delivering an income in conjunction with the Aged Pension or more complex advice needs.”

The two largest funds also added that they “look forward” to working with the government “further” on the format of what a “fit-for-purpose” advice record will look like, how collective charging will work in the best interests of members, as well as streamlining the ability to pay for retirement planning advice from their super fund.

Winners are ‘hardworking Australians’

Separately, Aware Super’s chief executive officer, Deanne Stewart, said the winners from the announced changes are “hardworking Australians”.

“We welcome today’s announcement by the Assistant Treasurer because it recognises what super funds have seen coming for a long time — the urgent need for Australians to have access to high-quality, personalised financial advice to help them get ready for, transition to, and enjoy their retirement,” said Ms Stewart.

She assessed that “implemented well”, the government’s proposed reforms will allow Aware Super to “truly change the way we help our members”.

“Superannuation has always been designed to provide a retirement income for Australian workers, and as a super fund, we set out to help every Australian achieve their best possible retirement”, Ms Stewart stressed.

She underlined data held by the fund which showed that members who receive advice draw down more of their savings as income in retirement than non-advised members.

“Advised members recorded nearly two and a half times greater voluntary, tax-efficient contributions of non-advised members.”

Ultimately, she added, advised members “report feeling more confident” about their financial position heading into retirement.

ISA backs ‘sensible reforms’

Industry Super Australia (ISA) also offered its support on Tuesday, noting that intra-fund advice will allow funds to offer the information “members need for retirement planning”.

“Empowering funds to provide relevant information like family member pension eligibility and tax obligations is a sensible step that will help members,” said ISA chief executive Bernie Dean.

ISA also revealed that according to its surveys, general advice and intra-fund advice are the most dominant service members access, with very few opting for comprehensive personal advice.

Combined, these offerings comprise 95 per cent of all advice provided by surveyed funds, with less than 1 per cent of members referred to comprehensive personal advice.

Advisers have generally been opposed to the idea of superannuation funds expanding their role in advice. Addressing these concerns, Bryan Ashenden, head of financial literacy and advocacy at BT, penned a recent article for ifa stressing that “it’s imperative to keep in mind that not enough Australians are able to access, or afford, good quality personal financial advice”.

“If the proposed advice reforms open advice up to more Australians, that has to be a good outcome. It provides the opportunity for many to start their advice journey and be better prepared, and more informed, for when they do need to engage a financial adviser to assist and guide them.”