Calls to adopt UK’s ‘guidance guarantee’ in Australia to complement advisers

In its budget submission, Super Consumers Australia argued that all Australians should be able to improve financial security and gain greater peace of mind with quality financial advice.

Super Consumers Australia director Xavier O'Halloran said that new solutions are needed, particularly for consumers seeking retirement guidance. And while the incoming retirement income covenant – which will require superannuation trustees to plan and outline a retirement strategy for members – will have benefits, Mr O'Halloran said consumers will need assistance navigating its complexity.

“To achieve this, we need to go beyond the financial advice sector and consider the role of independent organisations, government and new business models in complementing financial advisers and overcoming these barriers,” he said.

“In the United Kingdom, their government created a ‘guidance guarantee’ to develop assistance for people approaching retirement. The proposal received widespread support, even from industry stakeholders, who acknowledged that consumers wouldn’t engage with guidance unless it was impartial, good quality and covered the options in the market.”

On a recent episode of the ifa Show, Challenger Life’s general manager of retail distribution, Luke Cheetham, said the covenant will present a huge opportunity for financial advisers.

“We work in a highly complex retirement system and you couple that with a lack of understanding of the risk that many will face over a 20 to 30 year retirement, it really means that transitioning from work to retirement without the right guidance [and] without the right advice can be a really daunting prospect for many,” Mr Cheetham said.

“So I do feel that there’s great potential for product manufacturers and the advice market to work together and help make sense of retirement to give people the confidence that they need, when it comes to managing their savings.”

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.