The superannuation industry is widely supportive of the government’s update on DBFO, after it was revealed funds would have two options for charging fees for the advice provided by the new class of adviser.
In a statement on Tuesday night, Financial Services Minister, Stephen Jones, unveiled further details of the government’s second tranche of the Delivering Better Financial Outcomes package, saying that licensees will be permitted to charge a direct fee for the advice provided by the new class of adviser (NCAs).
Super Review understands that in meetings held by Treasury with select groups in the lead-up to Tuesday night’s announcement, industry super funds had clashed with retail funds and advice stakeholders over the charging model for the proposed new class of adviser.
Namely, retail funds in particular are believed to have opposed the collective charging model, given their limited size compared to the much bigger industry funds. As such, the government’s latest announcement is perceived as levelling the playing field by allowing funds to choose how they charge.
The Association of Superannuation Funds of Australia (ASFA) welcomed the government’s announcement, highlighting in particular the collaborative approach the government took.
“It was a true collaboration and testament to the broad commitment all ASFA members, associations and the government has to ensuring more Australians have access to help with their retirement,” ASFA CEO Mary Delahunty said.
Delahunty said the group is particularly pleased to see that the creation of the new class of advisers is accompanied by “strong regulations and consumer protections” to ensure high standards are maintained.
“These reforms are a clear signal of the government’s commitment to delivering better outcomes for Australians by addressing barriers to affordable financial advice,” she said.
“The future for Australians’ retirement savings is brighter with a more inclusive and modernised advice framework and we look forward to seeing the legislation progress in the New Year.”
The Super Members Council equally applauded the government, saying it will “better enable” super funds to help members to plan for retirement.
Super Members Council CEO Misha Schubert said: “Getting more Australians access to simple information and advice is the huge missing piece of the retirement puzzle, and the announcement is welcome progress in addressing the vast advice gap.”
She said that the group will “examine the legislation closely to ensure strong protections for consumers”.
“We look forward to working with government, Parliament and all key stakeholders to pass these crucial reforms,” Schubert said.
Separately, the Australian Retirement Trust (ART) said it sees “accessible, informed, and affordable financial advice as essential to giving our members confidence in their retirement”.
“We welcome these reforms to help more Australians access high-quality advice and make the most of their super,” said Simonne Burnett, ART’s chief member experience officer.
She said that ART has an embedded robust internal process to prevent consumer harm in the process of providing advice.
“We believe consumer protection is paramount, and we welcome the government’s commitment to putting the needs of consumers first,” Burnett said.
Highlighting the strong demand for advice, Rest CEO Vicki Doyle said that the fund’s members utilised its digital advice tools more than 30,000 times in the last financial year, with more than half of the interactions by members under the age of 40.
With so many in need of financial advice, but unable to access it largely due to the high cost, Doyle said “these reforms support the growth of digital advice and will help meet the growing demand for people wanting access to simple and accessible advice”.
Doyle said: “Without financial advice from their super fund, many of our members wouldn’t be able to get advice at all.”
Noting the new financial operating model for NCAs, Doyle said this will “support a super system that is fairer and more equitable for everyone”.
“It will allow us the opportunity to substantially expand our financial advice and make advice accessible to even more of our members. This includes the ability to more deeply engage our members at key decision points and life stages through personalised ‘nudges’,” she said.
Taking a slightly different focus, Vanguard managing director Daniel Shrimski noted the important role of “personalised, professional financial advice” in helping Australians navigate their retirement planning.
“Advisers are best placed to deliver comprehensive personal advice that considers the full information of households to help retirees to optimise their retirement income,” Shrimski said.
“With this announcement, we hope that a more modernised best interest duty and the removal of safe harbour steps will help lighten the load for advice practices so they can support more Australians to navigate their retirement journey.
“As a result, Australians need more access to guidance and information to close this advice gap. Ideally this should come from trusted, highly regulated institutions to help Australians achieve greater financial security and retirement confidence.”
Similarly, CFS Superannuation CEO Kelly Power stressed the need for a more expansive advice industry to support the needs of Australians without compromising professional advice businesses.
“This announcement is a key step to making financial advice more accessible. We support the need to maintain the distinction between professional advisers and the new class of advisers, and look forward to the next phase of consultation,” Power said.
“We are also pleased to see that the government has indicated that newly qualified advisers can be employed by licensees. This will enable more people to get the help they need and look to the future with confidence.
“Our research has consistently validated the significant consumer benefits of receiving financial advice, which is why we support a growing and vibrant professional advice sector now and into the future.”
