Michelle Levy, reviewer of the Quality of Advice Review, believes super funds already have too much on their plate to provide retirement income advice to members.
Speaking at the SMSF Association Technical Conference in the Gold Coast, Levy discussed the recommendations in the government’s formal response to the QAR.
In the second stream, the response focused on building a way to expand access to retirement income advice.
The focus of this is the idea it can be provided by superannuation funds, potentially by financial planning students.
At the time of the response, Minister for Financial Services, Stephen Jones, said he wanted to start with super funds as they have a different regulatory regime to banks and insurers.
Levy said: “It’s going to be really hard. Superannuation funds are being asked to do so much and solve so many problems, and it does worry me that this industry issue only has to sit with superannuation funds to solve.
“APRA and ASIC released their report on the Retirement Income Covenant where they said most funds are not acting quickly enough or complying with the covenant and part of that is because what they are being asked to do is just too much and too hard, and exposes members of the fund to risk.
“Solving the retirement gap can’t just sit with super funds. It’s too much of an issue.”
She added the government’s idea of advice from super funds is at a larger level than she had originally envisaged in her Quality of Advice final report.
“The kind of advice that the government is looking for super funds to give is probably at the harder end of the spectrum, and I worry it will be a bad guinea pig for the recommendations as a whole,” she said.
“I thought they would give much simpler advice, so I worry this is the wrong place to start.”
Spiro Premetis, executive director of policy and advocacy at the Financial Services Council, added its members felt digital and automation would have been a better starting point than them providing financial advice.
“You need the right scope, the right charging model and the right competency standard. The big risk for consumers is if we build something that is bigger than Ben Hur and we allow collective charging to apply on it, then we have saddled consumers with all this cost in a way that is ineffective and that would be the worst of both worlds.”
SMSF Association chief executive, Peter Burgess, said accountants could be an alternative option to provide advice. Around half of the SMSF Association’s members are accountants while the remainder are financial planners.
“If we are serious about closing the advice gap, then accountants have to be part of the conversation. There are thousands who are qualified and are sitting on the sidelines.
“We have tried to fix this for over 20 years, and we haven’t found a solution. But we are keen for them to provide some form of limited advice on SMSFs, in particular, and they have a role to play. It surprises me that they haven’t been part of the conversation.”
