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12 October 2020
Advisers have voiced disappointment at the lack of specific measures in last week’s Federal Budget that would support the drive to encourage Australians to seek professional financial advice.
The Association of Financial Advisers (AFA) welcomed superannuation-related actions, including measures to stop the erosion of account balances, and also fiscal measures such as tax writebacks to overcome the recession.
However, it says the Morrison Government could have done more for financial advice, an area that has become more important because of the economic slump.
“In the middle of the COVID-19 crisis and the worst recession in a century, Australians really need financial advice,” AFA CEO Philip Kewin said. “We would therefore have liked to have seen measures that reduce the cost and improve access to financial advice.
“People with access to financial advice make better financial decisions and have a better future, and clearly that is what Australians need right now. Financial advice will help drive the economy forward.”
AFA and other peak bodies have recently raised concerns over spiralling advice fees. They say regulatory reforms have led to higher compliance costs, forcing advisers to charge higher fees to stay afloat.
The financial devastation of the pandemic has increased the urgency of tackling the affordability issue.
AFA GM Policy and Professionalism Phil Anderson says tax deductibility is certainly one option that is worth considering.
“It won’t necessarily reduce the cost of providing advice but it will make it more affordable for people and that is something that we would certainly support,” he told insuranceNEWS.com.au.
“In terms of the Budget being constructed as a response to the coronavirus, our point was that there were no measures in there to increase access to affordable financial advice.
“So for people impacted by the coronavirus fallout and needing financial advice, we’re saying that there were no measures that were specifically focused on that.”
The Financial Services Council (FSC) says it supports the Budget’s “Your Super” package of reforms, which will benefit Australians to the tune of $17.9 billion over the next 10 years.
FSC says the super reforms, such as taking up a Hayne royal commission recommendation that every worker should only have one account, are a step in the right direction.
“The ‘Your Super’ package will permanently address the scourge of account duplication and fund underperformance,” FSC CEO Sally Loane said.
“FSC congratulates the Government for committing to the [Hayne] royal commission’s ‘default once’ recommendation, which will prevent unnecessary account erosion from fees and the creation of new duplicate accounts.”