A report published by the Association of Superannuation Funds of Australia (ASFA) Research and Resource Centre, has called on ASIC to allow scaled advice providers to recommend retirement products, but not everyone agrees.
The industry body has said in the published report that, “the scaled advice operating guidelines being developed by ASIC should be drafted in such a way as to allow funds to provide all members with advice relating to retirement products. Increased take-up of longevity products will occur when fund members are better advised and educated about such products.”
Not all advisers have shared ASFA’s sentiment with Jason Bragger of Brisbane-based firm Dolfinwise commenting that scaled advice was not sufficient to recommend retirement products. The adviser said that, “these products should never be purchased without a careful and comprehensive consideration of a person’s full circumstances,” and “implications of purchasing the wrong retirement products can have devastating effects. To consider scaled advice should allow recommendations of retirement products by call centre operators is to make a mockery of the whole advice framework.”
Bragger has suggested that, “rather than extending the scope of scaled advice, the corporate regulator should seek to look at reducing compliance costs for holistic advice on retirement issues.”
Corporation Superannuation Specialists Alliance (CSSA) has also spoken out against the ASFA submission with president Douglas Latto commenting that “any product recommendation is personal advice by definition.” Latto has said he is “not against the concept of bringing the issue more to peoples’ attention but recommendation of product is very specific and we can’t say how you can do that in scaled advice; you have to take their whole financial position into account.”
The report also prompts product providers to “take the lead in educating consumers on longevity risk issues by modelling a range of returns, volatility and life expectancies” and focusing on retirement-related risks such as longevity, sequence, timing and inflation.”