The unmet financial advice needs of older Australians necessitates a customer centric advice framework, says SMSF Association CEO John Maroney, drawing an analogy to how health care is provided.
Maroney raised the issue of unmet financial advice making it harder for older people to plan for their retirement, in a recent address.
“The level of complexity in the system and the continued volatility in investment markets, where most of the risk sits with the individual member, is stressful for retirees.”
“Although some longevity protection is provided by the Age Pension for those with modest assets at retirement, or at older ages, for many retirees it is very difficult to share or manage their retirement risks.
“For this reason alone, the Association believes the future role of financial advice regulation is crucial. We believe that a more customer centric advice framework is needed, where consumers can receive trusted and professional advice.”
“Consumers want affordable advice, delivered with the help of sophisticated technology, via a system of open superannuation similar to the open banking environment with clear consumer data rights.”
“We expect market dynamics will continue to evolve and that the financial advice profession will gradually look more like a medical profession, where regular health checks can be undertaken using real-time data that is readily available for consumers and can be shared with their advisers.”
Maroney said that efficient initial financial advice could be similar to a half hour consultation with a doctor, looking at the financial equivalents of “blood pressure” without the “extensive manual data gathering” – which is “primarily focused on risk mitigation for advisers rather than value adding for consumers”.
Though Maroney stressed that the SMSF Association isn’t seeking a reduction in consumer protections.
“However, we believe more effective regulation can be developed in practice and can be much better by focusing on what consumers really want and need. Mechanisms are needed whereby most Australians can have access to affordable advice with significant trust in the system.”
“This will require continued advancements in technology, rebuilding in trust from all participants in the financial system and from focusing on what is in the best interest of the consumer in reality instead of theory. Protecting retirement savings and financial health of all Australians is at the forefront regardless of which forms of retirement savings are chosen.”
The Association is “hopeful’ the Retirement Income Review will help address these issues, though Maroney acknowledged that the review wont be making recommendations – it is tasked with establishing a ‘fact base’.