Products created under the retirement income covenant should not require financial advice as it will not be sustainable or scalable, according to a panel.
Speaking on the CEPAR Pensions and Retirement Research colloquium, Cbus group executive – brand, engagement, advocacy and product, Robbie Campo said it was not sustainable or scalable at an individual or system level to build strategies that relied on every single individual member in the system that sought personal advice to be guided into making a selection.
“In my mind, it’s something more like an advance calculator or a version of a retirement income estimate that can match members’ circumstances to the types of products that will support them,” Campo said.
“From an individual product provider perspective the way we engage with that kind of strategic advice, we’ll probably be constrained by the strategies and products that we offer. So, there’s quite a lot of complexity.
“I think it will be like what we’ve done with retirement income estimates but with some guardrails and limitations or guidance about what is okay to say. We can create some templated versions of guidance and nudging that will be much better than what we have currently.”
Also on the panel, Challenger retirement income chair, Jeremy Cooper, said the products would need to be close to being a default
“If it’s not actually default, it’ll feel like it and that is the sort of state that we need to get to, in my view. I think we’re finding our way here, but I think Robbie’s point about personal advice, the sheer scale of some of the member cohorts that are moving towards and into retirement are simply too large to expect that,” Cooper said.
“So, I think over time as we get to know and love these products we will be much more comfortable about them being soft default – effectively a default product.
“The trusted brand, or the fund says ‘look, we’ve got a sufficient amount of data for you, we’ve got data from you for the last X decades, here is our retirement offering’. It’ll be as simple as that.”
Wow, that is so sad. Such a recipe for disaster. No asset allocation advice, drawing income from defensive assets, interaction with DSS pensions. asset test, income test, consideration of annuities. So sad, just a product flog again.