Super funds to open pathway for new entrants, says Jones

Minister for Financial Services Stephen Jones hinted on Wednesday that non-relevant providers working in superannuation funds will provide “narrower advice” and will therefore have to meet “narrower qualifications”.

The government’s policy position on the expansion of superannuation funds’ advisory powers should be known by the end of this year, with legislation set to be released for consultation early next year, Mr Jones confirmed at the FAAA’s congress in Adelaide.

Last week, addressing the second tranche of the government’s response to the Quality of Advice Review (QAR), the minister said he is currently engaging in efforts to consolidate diverse ideas into a unified legislative instrument.

“Everyone had a different idea about what they wanted funds to be able to do. So, three things, scope of advice, competence or skills or training and qualifications required to provide that advice, and then what is funded as part of the normal operations of the fund and what is individually charged. So, working through the details of those three things,” the minister said.

“From a policy point of view, I think we’re pretty close. I’ve got to get whole of government complying on those things.”

And on Wednesday, he revealed that it’s likely to be a “narrower” set of qualifications for those individuals providing advisory services to fund members.

He assured that by “narrower” he doesn’t mean “the lowest of possible bar”.

“I think if we get it right, and we’re determined to, what we do is create a new pathway for someone who has a part of a qualification to then move through perhaps to a fully-fledged financial planner,” Mr Jones said.

This, he explained, would open up a “logical pathway” for someone who starts at a superannuation fund but wants to then become either a self-licensed adviser or work for a licensee.

“That becomes the incentive for them to complete their qualifications,” he said.

Previously, it was the banks that incentivised new entrants into the market. But once they exited the industry in the wake of the royal commission, so did the pathway they had created, which inadvertently caused a significant dent in adviser numbers.

Last month, in an exclusive interview with the ifa, Minister Jones said he is “totally on board with the professionalisation of the industry”, which, he noted, requires an “acknowledged qualification framework”.

“We’ve got a problem here to solve. Let’s work together on it,” the minister said.

At the time, he stressed that a pathway into advice for those studying across other areas of financial services could be key to lifting new entrant numbers.

“People, when they’re leaving school and thinking what university degree they’re going to do, don’t think, ‘Oh, I want to be a financial adviser’. They think, ‘Oh, I’m interested in commerce or I might want to be an accountant, I’m interested in the law, corporations or business’, all that sort of stuff. That’s the degree that they find themselves going towards,” Mr Jones said.

“Having a pathway that enables somebody who might have studied accountancy but at the end of the day, discovered that they were more interested in the people side of the business than the planning and the strategy, and thought financial planning is absolutely for them. How can we get them to connect their very relevant accounting qualifications with a post-degree qualification? That’s necessary.”