Super funds embrace QAR’s expanded financial advice framework

Australian superannuation funds have widely welcomed the Delivering Better Financial Outcomes reforms as a “big win” to expand the advice services they can provide to members. 

On 7 December, Minister for Financial Services Stephen Jones unveiled the final response to the Quality of Advice Review in Canberra. 

“The government will expand the role of superannuation funds in providing advice to their members,” he announced, adding that they have a ‘unique obligation’ to meet the sole purpose test.

The minister clarified what funds could charge for advice, with the same list of advice topics applying to collectively charged advice and advice that is charged directly to individual member’s super account.

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This will include:

• Investment decisions.
• Delivering retirement income.
• Considering broader circumstances for both the member and their household.

 
Jones also confirmed super funds will have a specific permission available to them to prompt or ‘nudge’ members. 

“This will allow funds to be proactive and encourage members to think about their financial situation and to seek advice at important decision points that they might otherwise have missed,” Jones said.

Funds’ reaction

Major super funds broadly supported the landmark reforms, following their ongoing advocacy to break down the previous barriers prohibiting them from providing advice to members.

AustralianSuper chief officer for retirement Shawn Blackmore described the new framework as a “big win” for the millions of Australians seeking additional guidance about their financial future. 

“Super funds are the right vehicle for these reforms as there is already very strong legislation governing fiduciary duty to ensure funds such as AustralianSuper act in the best financial interests of their members,” he explained.

“This is a positive step forward for millions of members who will now be able to access the right level of financial advice they require.”

Blackmore also supported the controversial ‘qualified adviser’ category, outlining it as a ‘smart way’ of addressing an urgent need for straightforward advice.

Australia Retirement Trust (ART) executive general manager of advice, guidance and education Anne Fuchs looked forward to super funds delivering more accessible advice.

“This is a transformative announcement for the industry. As one of Australia’s largest funds we’ve been advocating on behalf of our 2.3 million members to get improved access to professional financial advice and this timeline for draft legislation is an important milestone,” she said.

To help Australians retire with confidence, Fuchs believes this involves delivering a lifetime of education, guidance, advice, and intelligent product solutions.

UniSuper head of financial advice and education Andrew Gregory said the fund intends to double down on its advice offering now that further information has been issued by Jones.

“Eighty-five per cent of our members tell us they feel more confident in their retirement planning since receiving advice from us and, more importantly, 99 per cent say they intend to implement it,” he commented.

“Super funds are perfectly placed to provide this advice and the data is compelling: more advice means better retirements.”

Gregory highlighted the ‘missing middle’ in advice where Australians without large super balances go underserved by advice providers. 

“For many of these people who are stuck in the middle, simple questions turn into complex answers. It may not make sense for them to pay for comprehensive advice, but their needs are not served by general advice, and we want all our members to benefit from the right advice as they transition to retirement,” he continued.

Deanne Stewart, Aware Super chief executive, also expressed her support for the government’s ‘pragmatic action’.

“The reforms announced by Minister Jones this morning are a crucial extension to the advice services super funds can offer their members today. These important reforms enable us to significantly increase the scale at which we can provide safe, accessible, and high-quality financial advice to the 5 million Australians in or nearing retirement,” she remarked.

The CEO was especially pleased to see the role of personalised ‘nudges’ included in the announcement, which the fund had recently pushed for.

“Nudges will be a cornerstone of digital advice solutions as Aware Super, and the wider superannuation industry, increasingly harnesses the power of data and generative AI to deliver smarter and increasingly sophisticated digital advice solutions to members,” she said.

Vicki Doyle, Rest CEO, echoed these sentiments: “Many of our members would simply not be able to access advice if it wasn’t available through their fund. This proposal will help make the super system fairer and more equitable.”

She emphasised the Rest’s 1 million female members and 1 million members aged 30 or younger, people who historically have been less likely to access advice.

On the association side, the Super Members Council of Australia (SMC), formed earlier this year from the merger of Industry Super Australia (ISA) and the Australian Institute of Superannuation Trustees (AIST), shared its support for the reforms.

“Super funds are trusted sources of information on super and retirement for their members and should be provided with the right legislative and regulatory tools to meet members’ needs,” said Mel Birks, SMC executive general manager of policy.

“The proposed expansion of the scope of advice funds can provide will allow thousands more Australians approaching retirement to get the simple advice they need to make the best of their financial position.”