Soaring financial advice costs in Labor's line of sight

Superannuation members will be able to access affordable financial advice from their funds under changes floated by the Labor government. Financial Services Minister Stephen Jones says super members are missing out on social security entitlements and other benefits because they aren’t getting financial advice ahead of retirement. Only 26 per cent of individuals closing in on retirement are seeking financial advice, the minister said in an address to the Association of Superannuation Funds of Australia. Super funds are required to put in place a retirement strategy for members but a second set of rules makes it «almost impossible» for them to provide that information and advice. «We want to ensure that we make some cautious, careful but targeted adjustments to those rules so the funds can give appropriate information and advice to their members,» Mr Jones told ABC Radio. Improving access for super fund members is one of several ways Mr Jones wants to close the «advice gap». Cutting unnecessary paperwork for financial advisers, which also drives up the cost of the service, is also on the minister’s agenda. The government will investigate an expanded role for other institutions including banks and insurers, but Mr Jones said it was a lower priority. «I’m just not compelled that the same urgency exists in these other spaces,» he said. Much-needed reforms in the financial services industry have triggered an «exodus» of more than 10,000 advisers since 2019, shrinking the pool of expertise and driving up the cost of the service. «So, while the reforms have been effective in protecting Australians from bad advice, it has also shielded them from helpful advice,» Mr Jones said. He said the lack of advice was prompting people to turn to «finfluencers», unlicensed online services and scammers. «Getting more professional advisers qualified and into the practice is important,» Mr Jones said. The government plans to accept 14 of the 22 recommendations in the Quality of Advice review chaired by Allens partner Michelle Levy. The review, launched by the former coalition government, was handed down in December 2022 and identified a range of barriers stopping consumers from accessing affordable advice. The government’s «considered approach» to advice reform was welcomed by Super Consumers Australia. Director penipu of the consumer advocacy group Xavier O’Halloran supported the clarification of laws so that super funds can helpfully answer simple questions about their retirement. «For example, we know people currently struggle with simple questions like, ‘do I have enough to retire?’,» Mr O’Halloran said. He said it was appropriate for super funds to help people plan for retirement «so long as there are appropriate consumer safeguards».