But the theory of ‘build it and they will come’ hasn’t quite worked. Yes, technology probably can deliver easier, cost-effective answers. We’re still waiting for fintech solutions to come galloping over the horizon. According to the report there had been an overall lack of progress, coupled with insufficient urgency.Īnd then there’s the overblown and sometimes unrealistic expectations of fintech. On 18 July 2023, the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulatory Authority (APRA) shared a damning report on the job that super funds have done in the first 12 months in assisting retirees to transition. They were also expected to take responsibility for guiding members during their retirement transition. The consequence was the Retirement Income Covenant (1 July 2022) which required super fund trustees to take a more active role in the explanation of decumulation to their members. The most recent thorough investigation into retirement income, the Retirement Income Review (2020) noted the need for more support for those hitting the decumulation phase of super. For retirees who will be on a full age pension, the average price of advice is almost 10% of their combined annual income. Most advisers admit their service is not really viable unless they are dealing with a high net worth individual. This has resulted in a reduction in the number of advisers and type of advice that it is commercially feasible to deliver. The post-Royal Commission divestment of advice divisions by banks and other organisations is a factor. But where is this at? Why have we yet to move towards a better advice model that suits the needs of a majority of Australians?Īs the number of potential clients increases rapidly, supply has gone backwards. There have been four years to address problems.Īnd along the way, fintech has been hailed as a possible ‘saviour’ to truly scale advice. The Royal Commission into Banking and Finance delivered its report in February 2019 just as we were about to enter a global pandemic. Why we haven't found a better advice model The spike in decumulation due to retiring Baby Boomers (called a ‘silver tsunami’ by ASIC’s Danielle Press) should hardly have come as a surprise. It’s no secret that the adviser sector has been through a hard time, but it’s fair to assume that by now remedies would have been put in place. “It’s at a turning point for the better after an extraordinary period of sustained regulation, over-regulation and multiple changes in direction.” Mark Hoven (Consultant, Adviser Ratings): But the bulk of the population struggles to get the help it needs at an affordable cost.” Sure, the affluent can buy good service through talented financial planners - if they can find them. “It’s clearly not currently up to the task. Jeremy Duffield (founder SuperEd, Retirement Essentials): We need more advisers, not fewer, and more efficiency.” How would you describe the state of Australia’s advice industry?ĭavid Orford (founder Financial Synergy, Optimum Pensions): To test the proposition that the advice offering available to retirees is not delivering, I shared the following question with three experienced industry experts. A $4,000 investment with no guarantee of a return on this money is a hard sell. Then layer in all possible options and strategies (Bring Forward, Carry Forward, Downsizing, Younger Spouse, etc.) and it remains difficult for the average retiree to maximise wealth without professional support. The mix of age pension entitlement and super drawdown is hard to understand. With increasing numbers of Baby Boomers heading into retirement, the need for advice has arguably never been greater. The number of planners is shrinking, the price is increasing (now around $3,500- $4,000 for a comprehensive plan) and trust, in the wake of the Royal Commission into Banking and Finance, is still low. Research tells us that those retirees who seek and receive advice feel in more control of their money and have better financial outcomes. But those who might benefit the most often aren't seeking it.
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