The devil is in the details with Michelle Levy’s recommendations, according to Insignia CEO Renato Mota, who sees the review as a fantastic opportunity for meaningful structural change — if implemented correctly.
Speaking at the firm’s thought leadership and virtual adviser education program, Elevate Digital 2023, Mota reiterated the importance of avoiding unintended consequences in the quest for change.
“The devil is in the details, but at a high level, if adopted, you’d have to suggest the [QAR] would improve affordability and accessibility,” he said.
“However, it does come down to implementation. We look forward to the consultations and working with the government to understand which pieces of this are easier to implement and which pieces need further thought and consideration to avoid unintended consequences”.
Insignia’s chief advice officer, Darren Whereat, emphasised the importance of bringing individuals into the system earlier with the review’s recommendations.
“It’s hard not to recognise that there are many millions of people outside the system who may need a different type of help — that might be transactional advice, intrafund advice, coaching, a number of things that are probably earlier in the journey to financial freedom.
“With the right consumer protections around it — and nobody is saying this at the expense of the consumer; nobody wants to go to the dark old days and I think everybody from government to the profession is recognising that — we need something to get people into the system earlier.
“We need to give them an opportunity to understand what advice or coaching could do for them, and if we project this forward a decade, we would have more people familiar with the benefits of financial advice and opt into more of an ongoing relationship than they would have otherwise have”.
He acknowledged an important first step was tackling the “low-hanging fruit” among the recommendations, such as doing away with statement of advice (SOA) requirements.
“In the order of stuff, free us up early around those low-hanging fruits and then really just give us the opportunity to take some of the costs out of the business. That will free up capacity, that will improve accessibility, and it will lower costs. I think for everybody, whether you’re a super fund or providing other support services or full advice, it will actually enable us to service more consumers,” Whereat said.
Reflecting on the average superannuation fund’s experience in not being able to provide simple advice, Mota added: “There is a pool of talent, expertise [and] capability that could be used to complement the current system, to help people make relatively simple decisions that are personal to them, in a way that helps them make the next best decision.
“The next best decision could be followed up by greater financial confidence, greater curiosity to ask more questions, to then maybe seek more financial advice. At the moment, the answer is ‘we can’t help you with that’ and I think that’s incredibly unfortunate”.
