Changes announced for affordable retirement financial advice

Key points:

• The Quality of Advice review reveals the average ongoing financial advice fee has increased by 41 percent between 2018 and 2021

• There are five million Australians nearing retirement, with an average balance of $200,000 upon the the transition to post-work life

• Of the 22 recommendations in the review, the Government will adopt 14 recommendations, either in principle or in full, to make financial advice accessible

Assistant Treasurer and Minister for Financial Services Stephen Jones MP says the Government is committed to accessible and affordable financial advice for Australians seeking to retire.

Mr Jones says the Government will accept 14 of the 22 Quality of Advice review recommendations in line with the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The accepted recommendations will either be accepted fully or partially, with other recommendations still under review by the Federal Government as a part of the Delivering Better Financial Outcomes package. Ultimately, the remaining recommendations will be approved or denied by the Government by the end of 2023.

“Over 10,000 financial advisers have left the industry since 2019 — it should be said that in many instances, this has been a good thing for consumers,” says Mr Jones.

“Many of the people who left the industry were simply not suited to the requirements of a profession which put the interests of consumers first. However, it also means that there are only 16,000 financial advisers today. Between overlapping regulations and a shrinking adviser pool, advice and information are now too expensive or inaccessible for everyday Australians.”

The Minister says the Government will progress the implementation of these recommendations through three streams of work: stream one, removing red tape that confuses consumers; stream two, expanding access to retirement income advice; stream three, exploring new channels for advice.

Council on The Ageing (COTA) Australia, a leading advocacy organisation on behalf of older people, is supportive of the Federal Government moving to remedy the issues which older Australians face when it comes to finding affordable advice about their super, especially as they near retirement.

COTA Australia Chief Executive Officer (CEO) Patricia Sparrow says the organisation looks forward to seeing the details of the upcoming legislation, but says reforms to help people understand how to maximise their retirement income were long overdue.

“Anything that makes it easier for people approaching retirement with clear, transparent and high quality advice on how to maximise their retirement income is a good thing,” Ms Sparrow says.

“The focus needs to be on providing customers with high quality advice that will help them ensure they are in the best possible position in retirement. Anyone who has attempted to navigate the superannuation system will tell you that it can be confusing, complex, and unclear.”

Ms Sparrow says that while the changes being announced today are positive, the finer details still need to be seen to make sure people aren’t getting ripped off, adding that more needs to be done for people who will need support in the near future for retirement.

“What’s still missing is a way to better engage with people still working and accumulating superannuation,” Ms Sparrow says.

“It’s critical that people are given clear and accurate advice before they hit retirement age too so that they can make decisions early that will put them in the best possible position.”