Licensee assures super funds entering advice is not a threat

Speaking with ifa, Lifespan Financial Planning chief executive Eugene Ardino said that the expanded role of superannuation funds in advice, proposed by the Quality of Advice Review (QAR), is aimed at growing access to advice.

“The Quality of Advice Review is trying to solve for situations where the consumer wants some basic information or repayment advice, but it’s very simple advice that would now be considered personal advice,” Mr Ardino said.

“But they don’t want to go through and perhaps need to go through the full personal advice process from the consumer’s perspective. Under the current regulatory framework, that’s the only way they can get the advice.

“I think what is being solved for is to allow employees of perhaps any product provider, but particularly super funds, to be able to give that basic level of advice without having to be relevant providers.”

He explained that there is going to be a trade off between expanding access to advice and loosening the restrictions on who can provide personal advice.

“I’m probably favouring wanting to give millions of Australians access to some basic level of advice that their super funds can give them,” Mr Ardino told ifa.

“But there are issues to work through. You need a standard for that advice. You need some limitations as to what advice can and can’t be given by unqualified people.”

The licensee boss added that over the last decade, regulation has been increasing in the advice industry following a series of reviews and a royal commission, which he said has been driving the cost of advice up.

“Whenever you increase regulation, you make things more expensive, which reduces accessibility. And for 10–15 years, we’ve pulled on the regulatory lever and made things less accessible, more expensive, and more onerous. I don’t know that it’s led to great things so far,” Mr Ardino said.

However, he stressed that super funds having an expanded role in advice is not going to damage full-service advisers the way many fear.

“I don’t think this threatens advisers at all. I think the majority of people that are going to be served by this aren’t going to become full advice clients,” Mr Ardino said.

“Some might, but I also think that if some of these people can get some of these basic questions answered, they might actually be more likely to become full advice clients.

“So, I don’t feel threatened by this. I think the pie is big enough for advisers, particularly when you’ve got the number of advisers shrinking at a reasonable pace.”

Mr Ardino added that he looks at super funds offering advice in the same way he looks at digital advice.

“I think some people see this as a threat to advisers — I don’t, just like I never felt that robo-advice or digital advice was ever a threat because I thought its target market was mostly very different to that of other advisers,” he explained.

While he is not concerned about the impact on advisers and is bullish on what it could mean for consumers, how it will work still needs to be clarified.

“I’ve always been an advocate that we need to look at more ways to get more consumers to be able to access advice, even if it’s very basic advice, even if it’s not with advisers that are qualified,” Mr Ardino said.

“Because for very basic questions, perhaps you don’t need to go through the whole advice process, at least that’s what [QAR lead reviewer] Michelle Levy I think is suggesting overall, and I think why it’s going to take longer than many expect is because we now have to build this good advice framework. What is good advice? How does it operate? So there needs to be some regulatory guidance around what that actually means.”

As part of the government’s response to the QAR, Financial Services Minister Stephen Jones stressed that super funds are “well-suited to safely meeting the needs of their members”.

“They are already governed by strong obligations to act in the best financial interests of members and act for the sole purpose of providing retirement benefits to members.”

The minister, however, clarified that further consultation may be necessary to address questions regarding the scope of advice that can be provided by a fund, the education standards needed for an employee or representative of that fund, as well as how funds are held to an appropriate duty.

A timeline for these consultations has yet to be established.