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Self-managed investors need protection from themselves
The rise of self-managed retirement investing will present an increasing challenge for regulators, as they will need to protect investors, who may not have appropriate investment experience, from gambling away their retirement savings, according to BT Financial chief executive Brad Cooper.
The current focus of regulatory reform around raising industry standards is right for our current needs but the next big regulatory move will be around protecting many investors from their own ability to derail their own financial security, Cooper said at the Finsia Financial Services Conference in Sydney yesterday.
Rules and regulations have already surfaced in this segment of the industry to make sure investors don’t rort the system, such as preventing investments in artworks or lifestyle assets, and this approach will need to round down and provide more protection to some investors, he said.
“The alternative is just to say ‘look, if you want to do-it-yourself then just go for it’ and let the self-directed investors live according to the consequences of that,” he said.
But there isn’t a plan B for people who have great intentions and enthusiasm but not the requisite time, expertise or access to information, and they could end up gambling away their retirement savings, which is a risk our country can’t afford to take, he said.
Three key themes for the future are developing a sustainable retirement system, the responsible investment of retirement savings, and protecting consumers, Cooper said.
He also called for the urgent implementation of SuperStream reforms and the use of tax file numbers to help simplify the rollover process.
Near term imperatives for the sector are to restore investor confidence and trust, to lift engagement levels, to get more efficiency and hence greater return, and to attract and retain the best people, he concluded.
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