A regulatory framework is needed for affordable financial advice for retirees in the price range of $200 to $300 which could be through single issue scaled advice, or a modified version of intra-fund advice, according to the Actuaries Institute.
The Institute’s retirement strategy group convenor and Rice Warner chief executive, Andrew Boal, said there were a lot of people in large cohorts who had very similar circumstances with similar needs in retirement and the industry needed to come up with a system to give people the guidance they needed at an affordable price.
“Only retirees in the top 5% to 10% of savers typically have the level of complexity to justify expensive personal advice,” he said.
“We need a regulatory framework that allows for affordable access to information and guidance for the majority of retirees.
“That advice could cost as little as $200-$300. It could be single issue scaled advice, or a modified version of intra-fund advice.”
Commenting ahead of the Government’s Retirement Income Review, Boal said the retirement system needed to be efficient so that the cost to taxpayers met its core objectives.
“…it must be affordable and sustainable, and produce adequate outcomes that still allow some flexibility to meet an individual’s needs, and be simple enough so that retirees can optimise their position without having to spend a lot of money on advice,” he said.
Boal noted that while fund consolidation would continue the downward pressure on fees, funds needed to spend on money on financial guidance.
“The industry does need to spend a lot more time and money on the future provision of information and guidance, as well as the future retirement income products, which might mean that some of those fees might not fall by as much,” he said.
Agree there is a disconnect between supply and demand. Bulk of population only willing to spend that amount, but I struggle to see how this demand can be met. I.e. who can supply at this price?
Can only see it working if adviser salaried employee of large fund with all the systems in place (and very high utilisation rate). E.g. $120k salary + 22% on-costs = ~$147k. 3 appointments per day @ $300 = $900 x 200 days = $180k. Leaves very little room for slack, preparation, follow-up and prospecting. Is this sustainable / realistic? Probably not.
Even then, the return is grossly outweighed by risk taken (business and compliance).
1) I think he means an Hourly Rate – and even that is conservative…;
2) Astonishing how many people sit above, feed off, and commentate on the actual client facing Advisers, never acknowledging the destructive “Food Chain” of Financial Services; its idiotic, convoluted, counter productive, extremely expensive, extremely bureaucratic, politically and ideologically designed morass;
3) I wonder where these “Actuaries” come up with the Life Insurance Premium Rates?
* How are they approved [once upon a time, we were told that all increases need to be approved by the Federal Government Actuary!]?
* How they sit with the doctrine of commercial “Utmost Good Faith”, and “Unconscionable Conduct” as the Insurance Companies apparently try and drive the older, higher risk Insured out of their risk pools, decimate Advisers, and collapse the system, while being “The Last Man Standing”?
This is, of course after they merged themselves into becoming a tiny, uncompetitive, non innovative, self cannibalising market, while continually searching for “The Next Short Term Big Thing” [unsustainable, cross subsidised Group Insurance, discounted 1st/2nd year premiums, raping and pillaging Adviser Commissions…].
I have just seen a ~30% increase [after multiple years of 10-15% increases] for myself and clients-females, males, non smokers, etc…
ACTUARIES CALCULATE ALL THIS… And oh, BTW… who does the “modelling” for “Climate Change” and “Covid-19 Projected Death Rates”?
The lunatics are running the asylum.
$200-$300 for advice, I wish. It seems they have no idea of how much work and compliance goes into providing advice for clients. This amount wouldn’t even scratch the surface
Quite a pathetic and ill-informed conclusion. It’s a real worry when such naivety ( have to be kind here) is prevalent in an individual , whose views would be respected by the very nature of his role (by outsiders and decision makers) . He should know better , but does not. 🙁
All of the above…..
Either that or he’s about 20 years behind the times.
Oh I’ll gladly charge $200-$300 for advice if you remove all compliance. Whilst we are at it, can we ask actuaries to reduce their fees too. Perhaps I should quote from RiceWarner themselves in their 2018 article “Fees Versus Value where they state “An unhealthy focus on fees rather than value can lead to poorer outcomes for consumers” .
This person obviously has no idea what the regulatory requirements we must meet as Financial Planners when providing advice to retirees. Has he missed all of the changes over the past two years which have imposed significant burdens such as the new Code of Ethics, Best Interest duty, Safe Harbour steps and the list goes on.
He needs to venture out of his little Actuaries office into the real world before making such unfounded, out of touch statements.
Beg your pardon Actuaries Institute. Sorry, but you are way off the mark and clearly have no idea of the number of considerations with retirement advice, let alone the additional cost associated with compliance obligations.Perhaps you should stick to your knitting !!
There is no way that any advice can be provided $200 -$$300. The Actuaries Institute has absolutely no idea what a professional financial planner, with all the necessary qualifications required today, must complete, in order to provide compliant written. If it is general advice, we rarely.
It’s a bit like the TV repairman who charged $100, when it only took him a minute to fix the TV picture. After the householder complained about the cost, he said “I charged you 50 cents for turning the screw and $99.50 for knowing which screw to turn.” Let us see the Actuary discounting his own fees first !