The federal government has proposed reforms to make financial advice more accessible and affordable for Australians. The reform mostly impacts people approaching retirement. The proposed revisions will allow superannuation organizations to offer “limited” financial advice to members for a fee. This initiative will potentially save individuals thousands of dollars on professional consultations.
Assistant Treasurer Stephen Jones revealed the current system. It is shaped by strict regulations following the banking royal commission, and has restricted access to simple retirement advice. “About 5 million Australians nearing retirement are unable to get affordable, reliable advice,” Jones said. The reforms aim to address this gap by introducing a new category of diploma-qualified financial advisers.
These advisers will provide better financial advice personalized to members’ retirement and superannuation needs. The prices will be much lower than the current market rate for thorough guidance, which frequently surpasses $6,000. Jones underlined that this move will enable Australians with small savings to make educated judgments.
The idea is part of a larger set of legislative amendments that will be introduced during this term of parliament. The government has also tasked the APRA with creating criteria to ensure that services are ethical.
Possible Risks associated with financial advice
Concerns have been made about possible risks, such as poor counsel or excessively expensive charges. Critics point to ongoing issues in the $4 trillion superannuation industry, including claims processing delays and questionable spending practices by funds like Cbus.
Despite these concerns, the modifications include efforts to streamline financial adviser operations, such as replacing lengthy advising statements with shorter ones. This change is expected to reduce costs while increasing the usefulness of advisory texts.
The changes represent a big step toward addressing Australia’s “supply crisis” in financial advice, which has seen median advisory costs jump by 58% over the last five years. The government anticipates that the new class of advisors will help to triple the current pool of specialists, which is estimated to be 16,000, and give much-needed retirement planning advice to millions of Australians.
This effort demonstrates a commitment to boosting financial literacy and enabling Australians to make informed decisions at important life stages.
