A regulatory framework is needed for affordable financial advice for retirees in the price range of $200 to $300 which could be through single issue scaled advice, or a modified version of intra-fund advice, according to the Actuaries Institute.
The Institute’s retirement strategy group convenor and Rice Warner chief executive, Andrew Boal, said there were a lot of people in large cohorts who had very similar circumstances with similar needs in retirement and the industry needed to come up with a system to give people the guidance they needed at an affordable price.
“Only retirees in the top 5% to 10% of savers typically have the level of complexity to justify expensive personal advice," he said.
“We need a regulatory framework that allows for affordable access to information and guidance for the majority of retirees.
"That advice could cost as little as $200-$300. It could be single issue scaled advice, or a modified version of intra-fund advice.”
Commenting ahead of the Government’s Retirement Income Review, Boal said the retirement system needed to be efficient so that the cost to taxpayers met its core objectives.
“…it must be affordable and sustainable, and produce adequate outcomes that still allow some flexibility to meet an individual's needs, and be simple enough so that retirees can optimise their position without having to spend a lot of money on advice," he said.
Boal noted that while fund consolidation would continue the downward pressure on fees, funds needed to spend on money on financial guidance.
“The industry does need to spend a lot more time and money on the future provision of information and guidance, as well as the future retirement income products, which might mean that some of those fees might not fall by as much,” he said.