Super funds ‘likely candidates’ to address advice gap: Jones
Minister for Financial Services, Stephen Jones, has reiterated his support for superannuation funds helping everyday Australians manage their money following widespread departures in the adviser industry.
Based on recent numbers, at the start of the new financial year, there were 15,584 advisers in the industry, a 3.7 per cent decline during the year.
Speaking on ABC Radio Brisbane, Jones said: “I’m working out how can we get more advisers into the industry, but also how can we get more information and advice? So I’m looking at superannuation funds as a likely candidate.”
The minister highlighted the need to professionalise the advice industry after the GFC, “a number of spectacular collapses”, and really poor behaviour by some advisers.
“We’ve got to put in place new standards. We’ve got to ensure we lift the bar,” Jones stated.
“We didn’t do that just once. We did that about four times. So, the royal commission came along and we lifted the bar, put in place layer after layer after layer of well-meaning regulation, which was all designed to protect consumers from bad advice.
“But what it’s done, it’s also protecting consumers from good advice because there’s just not enough people and not enough avenues to get the advice, and that’s what my job is to fix.”
The first item on his QAR agenda is “removing all the obstacles that don’t provide any consumer protection but do make it harder for a licensed financial provider to provide information and advice to consumers,” Jones said.
Among the 14 recommendations accepted by the federal government in the QAR are a consolidation of three different fee documents into one simplified document; allowing more flexibility in how financial services guides are provided; removing the safe harbour steps from the best interests duty; and replacing statements of advice (SOAs) with a fit-for-purpose advice record for consumers.
It would be part of stream one in a package of reforms and a consultation will be held with industry to determine the implications and implementation details of these recommendations.
The second item on his QAR agenda, Jones said, is how to safely provide an environment where super funds can provide information to their members.
Jones explained: “They stopped doing it in large part because of the reforms put in place over the last decade. We do have to ensure that we’re managing for conflicts of interest. So, [we] don’t want to see a situation where someone is getting a commission for providing advice to somebody to buy a product from a superannuation fund that they work for.
“We’ve got to work through all of those conflicts to ensure that information and advice are being given by a fund that’s absolutely in the interests of the person who’s receiving it. And that’s what I’m dealing with the profession and with superannuation funds and with regulators and consumer groups through at the moment.”
He observed that, given the rising popularity of finfluencers on social media who provide free but unlicensed advice, the objective of advice reform is to “ensure people can make good decisions.”
“My objective [is] ensuring that people can make good decisions because they have good information and they’re not going to Instagram influencers who have no licence, have no knowledge, have no qualifications, and are providing broad and sometimes dangerous information to people,” Jones said.
Earlier this year, FAAA chief executive, Sarah Abood, indicated financial planning students could be candidates to work for super funds on providing advice.
“You can’t take someone off the street and put them in a call centre, there must be education and specifically our view is we already have this education for financial advisers," she said.
“Perhaps this is an opportunity where super funds could employ students of financial planning degrees who have completed relevant modules such as superannuation or retirement, but who haven’t completed a PY [professional year] yet but they could offer simple advice from a super fund in a way that is commensurate with the best interest of the client."
AUTHOR
Rhea Nath
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While there is a strong need to replenish adviser numbers in our battered profession, the Royal Commission teaches us the importance that super funds need to be put on a similar regulatory program as advisers under the AFSL regime. There cannot be any relaxation of education or supervisory standards, conflicts need to be managed or eliminated and importantly super funds need to participate in ASIC cost recovery principally the ASIC Levy. Shortcuts in this area will set us back a decade or two on the journey toward becoming a profession.
Advisers, and I use that term loosely, from superannuation funds will be great for superannuation funds to protect their funds under management. Not so great for quality advice to the consumers who are members of those funds. It's the Tied Agent re-invented. All things old are new again.
So first you create a brutal environment where experienced, professional advisors are pushed out of the profession early - and then you open the flood gates to lower quality, less rigorous advice being given to consumers. Smacks of a conspiracy theory today, perpetrated by the big end of town and carried out by lackey politicians! The next Royal Commission in the making!