‘Advice sector is in turmoil’: ALP’s Jones says

Speaking at an Industry Super Australia webinar, Mr Jones declared “the advice sector is in turmoil”.

“The old business model is stuffed. The new business model hasn’t been created,” he said.

But while acknowledging the urgent need for some serious adjustments, Mr Jones dismissed vertical integration as an answer.

Asked whether accessibility and affordability in advice could be solved by allowing super funds to provide free advice to members by keeping advisers on as salaried employees, Mr Jones dismissed the idea.

“I’m intensely uncomfortable, I’m not going to rule it out, but I’m intensely uncomfortable with the model that has been suggested,” Mr Jones said.

“The royal commission shows that all of the conflicts that exist were vertically integrated organisations where the adviser is attached to the fund, therefore the incentive of value capture is immense.”

Speaking alongside Mr Jones, superannuation minister Jane Hume said the Coalition government intends to keep the advice sector a “highly independent profession”.

“It’s taken them a long time to bring them here, let’s not lose it now,” she said.

Ms Hume did, however, acknowledge further “significant reforms”, praising past changes for transforming the sector from a “sales industry” to a profession.

“That’s been a very uncomfortable journey for an awful lot of those that are within the industry, but it’s been an [important] one.

“I think now there is great opportunity to see far better alignment between superannuation and the advice sector, but the advice sector still has a few ways to go,” Ms Hume said.

Last week, Mr Jones assured advisers, the Labor party would ease education requirements by removing the need for advisers with 10 years of experience and an “unblemished record” to complete a university degree to practise.

His words are considered a major shift in Labor’s policy, as the party distances itself from its greatest opponent, the Liberal Party, ahead of next year’s vote.