The disturbing Australia/UK advice parallels
A new white paper has pointed to significant parallels between the financial advice sectors in both Australia and the United Kingdom with regulatory changes over the past two decades having priced advice beyond the means of many retirees.
Importantly, it has also pointed to many of the remedies being the same including allowing more advice delivery via insurers and superannuation funds.
The white paper, published by Australian-based financial services technology firm, GBST, has pointed to the reality that 43.30% of people expect to remain reliant on a Government pension or allowance at retirement, compared to 26.80% having access to superannuation, an annuity or private pension.
The white paper has cited Australian Bureau of Statistics data from May, this year, showing that 37.10% of people expected to be fully self-funded in retirement, with 31.60% reliant on a government pension only, while a further 17.60% expected to be partly self-funded at retirement.
The white paper has pointed to the “advice gap” in both Australia and the UK with respect to retirement income with a third of those in the UK entering drawdown without taking any advice or guidance.
It said the recent Advice Gap report which revealed that just 9% of UK consumers have paid for financial advice in the past two years, down from 11% in the previous survey period and said the UK advice gap had been growing for over a decade.
“In a similar way to the UK’s RDR, the 2019 Royal Commission in Australia saw an exodus of large institutions providing financial advice, resulting in a significant reduction in the number of financial advisers, dropping from around 28,000 to 15,64652,” the white paper said.
“In addition, current regulations have increased the standard of advice. Even for relatively simple pieces of advice, advisers are required to conduct multiple meetings and extensive research, before they can make a recommendation.”
“The supply of advisers and high regulatory burden have increased the cost of financial advice, with many Australians now unwilling, or unable to access it. As a result, fewer people are getting the advice they need to prepare for retirement effectively. Consequently, as we’ve seen, a significant number of retirees in Australia fall back on the means-tested State Pension.”
The GBST white paper suggests that providers have an important role in educating consumers, delivering information and driving engagement but laments “the slow pace of regulatory change hampering their efforts to provide help”.
It said that going beyond simple guidance tools, some organisations in Australia and the UK are attempting to lower costs and improve access to advice via digital solutions aimed at those with lower investible assets.
“With over five million Australians nearing retirement and only 16,000 professional financial advisers, there is a significant gap in affordable advice accessibility. However, digital advice is poised to bridge this gap, offering a promising future for financial services in terms of enhanced accessibility and affordability. “
“Superannuation funds, life and general insurers, and banks have a unique opportunity to incorporate digital technology tools into their advisory services. These institutions play a crucial role in providing Australians with personalised and affordable financial advice on a large scale.”
“Superannuation funds, in particular, serve as Australia’s primary distribution channel for achieving this, making them integral to the process. By offering members access to user-friendly retirement planning tools and financial assessments within their platform, superannuation funds can provide investment and retirement strategies that would otherwise be out of reach for many.”
“Digital advice technology also has the flexibility to give members a hybrid option at any stage to include access to additional human support.”
Canberra Pollies & Bureaucrats have killed Advice in 20 years of ever increasing mostly useless Red Tape costs = tripled cost of Advice.
They have educated out, LIF stuffed, stolen trail commissions and generally bludgeoned to death nearly 15,000 advisers in the last five years.
Now the same morons say Advice is too expensive.
There are not enough Advisers.
We have 5 million Baby boomers needing retirement advice and it’s not going to work.
ITS LIKE A SAD MONTY PYTHON SKIT by the Morons in Canberra.
So the solution is to go back to everything they sad was bad for 20 years.
– Low educated sales agents / backpackers
– Owned by product providers
– Single only product sales
– Paid via Hidden Commissions. Thus most Industry Fund members will pay Hidden Commissions for No Sales Service
– Massive Hidden Commissions burden on young accumulators to pay for wealthier retirees for “free” sales advice, thus increasing wealth inequality.
Canberra Pollies & Bureaucrats you have truely out done yourself as a total bunch of bumbling clowns.
As an accountant, years ago I’d have a 15 minute conversation when getting accounts and tax returns signed, covering the main retirement, etc issues and generic strategies. Often no charge. We now have a fin planner do the same thing and charges $3k. Partly for red tape and partly as they don’t know the client, there’s a lot of fact finding which takes up way more of the client’s time.
I can understand the odd bad operator setting up SMSFs for the wrong reason. Suggesting people put $30k into super each year to save tax, or start a pension at age 65 to save tax could be done without a costly Statement of Advice.
Calling super a financial product is a bit over thinking things. People put money into super as it has a lower tax rate. Outisde the SG part of super, the rest is people just choosing where to hold their wealth in the most tax effective environment, and being aware they can’t access until age 60/65.
the classic excuse: Accountants “Oh, the client gave me the wrong information—it’s their fault, not mine.” Financial advisers cop the blame for everything, while financial products that underperform or fail to deliver what they promise get away with it. ASIC would rather come after us for “risk” than hold these products accountable. It’s ridiculous. If anything goes wrong, it’s always on the adviser just take a look at Dixon that employed advisers setup what they are allowed to give advice on, then blame the employee that followed their rules.
The documentation burden doesn’t help financial advisers. Every single conversation has to be noted in extreme detail because ASIC sees advisers as the scapegoat for any financial risk. Imagine how many more clients we could actually help if we weren’t drowning in compliance.
And the fees debate? Let’s be real. A $3,000 advice fee involves actual work—analyzing, strategizing, and giving clients a plan for their life savings. Compare that to accountants charging $2,500 to input numbers the client or ATO already gave them. And when accountants screw up, they just blame the client for claiming the wrong thing. But sure, let’s stay on that high horse, right?
This shows one of 2 things, you don’t actually understand what advise is or your adviser who is in your office is not very good at their job. or both?
You would think regulators in either country could use Google, phone or email and contact the other country. The fact that they aren’t able to do so raises questions about why they are allowed to have important jobs.