FASEA code reveals retirement planning ‘threat’

In a white paper, Aged Care Steps has called for a new approach to retirement planning that equips advisers to support their clients through key life transitions as they age.

“The changing regulatory environment has combined with increasing longevity and frailty issues to raise the very real threat of advisers being held accountable for clients having insufficient funds to support themselves as they age, including in aged care,” the advice support firm said.

Standard six of FASEA’s Code of Ethics states that advisers “must take into account the broad effects arising from the client acting on your advice and actively consider the client’s broader, long-term interests and likely circumstances”.

Compliance with the code is a requirement for all advisers from 1 January 2020.

Aged Care Steps director Assyat David said the real-life phases of retirement are not defined by age but by levels of frailty and dependence.

Further, he said the approach has implications for multiple aspects of an advice business – advice processes and ongoing service model, portfolio construction approach, revenue models and client value proposition.

“The three phases of retirement – the carefree years, the quiet years and the frailty years – need to be treated as distinct periods, with tailored planning considerations and outcomes,” Ms David said.

He added that it’s not about forcing every financial advice business to become an aged care expert.

“It’s about ensuring your advice business is aged care ready; which means you have a robust business model that caters to the planning needs of your clients entering the frailty years – so that you can demonstrate that you have considered their position and provided advice that is in their best interest and meets their broader, long-term needs, whether that advice has been provided directly by you or a referral partner,” Ms David said.

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].