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Tailored advice crucial in retirement product selection
Tailored advice rather than better disclosure documents will be crucial to the selection of appropriate retirement income products, according to major superannuation funds body, the Association of Superannuation Funds of Australia (ASFA).
In a submission responding to a Treasury Retirement Income Disclosure discussion paper, the ASFA cautioned that selecting an appropriate retirement income product “is not a simple task for consumers”.
In many instances tailored advice will be of more assistance than disclosure material, even if the disclosure material is in a simplified and standard form,” the submission said.
“That said, simple and meaningful disclosure in regard to retirement income products would be an important contribution to a supportive framework for such products,” it said. “In particular, ASFA recommends that lessons learned from past disclosure initiatives be kept in mind when developing simplified, standardised product disclosure for retirement income products.”
The submission said there were many factors which needed to be taken into account including age, gender, life expectancy and health.
“Disclosure material alone may not be conducive to such factors being properly considered by an individual when they are considering alternative retirement income arrangements. For many retirees and intending retirees there is a role for advice as well,” it said.
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The future of superannuation policy remains uncertain, with further reforms potentially on the horizon as the Albanese government seeks to curb the use of superannuation as a bequest vehicle.
Superannuation funds will have two options for charging fees for the advice provided by the new class of adviser.
The proposed reforms have been described as a key step towards delivering better products and retirement experiences for members, with many noting financial advice remains the “urgent missing piece” of the puzzle.
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
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