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Forward Thinking Magazine : August 2011
Macquarie Adviser Services 5 Macquarie Adviser Services cover story cover story Less certain, but considered equally important as a focal point of change in the SMSF sector over coming years, was the prospect that after FOFA, insurance advice will become a separate item that consumers will need to pay for if they choose to house it within their super. If made law, this will represent a huge cultural change for advice clients, requiring them to be educated on the value of insurance advice. Meanwhile, advisers would need to learn how to price their advice ‘piecemeal’, and in a way that consumers are willing to pay for it. Scaled advice When Bill Shorten, the Assistant Treasurer and Minister for Financial Services and Superannuation, announced further details of the FOFA reform package in April, one of the new elements was the concept of scaled advice. Defined by the Government as ‘single issue advice for which there is consumer demand’, the aim of introducing scaled advice is to make financial advice more accessible and affordable to more Australians. There is a belief, supported by ASIC research, that more Australians would seek financial advice if they knew they could source it for specific issues and did not necessarily have to go through the full holistic advice process. Our panel supported the introduction of scaled advice in principle, and conceded that perhaps the advice industry to-date has not done enough to help consumers with ‘life cycle’ decisions. “I think there was a study that actually said there were about 20 financial decisions that a person will make during their lifetime,” says Vicki O’Connor, WHK Central West’s financial planning manager. “I guess we have to say that as an industry and as a country, we fail to provide consumers, in any education forum, the skill sets to make those decisions; and so scaled advice really is about ‘let’s help you through those decisions’.” The inclusion of scaled advice in the reforms was not surprising to Heffron Consulting Managing Director, Martin Heffron. “I think we’ve already established the principle through the various intra-fund advice channels that there is a need for straightforward advice to be provided in circumstances where a licence sometimes isn’t necessary.” And as a principle, it sits well in the SMSF space. Practitioners say clients are actually looking for specific advice on particular areas in their SMSF and the introduction of scaled advice will certainly make it easier to deliver this. “I do think the attraction of SMSFs is that clients want to do some investing themselves,” O’Connor says. “They want to choose the asset classes but there is some advice that they do still need. We currently have to go through a very complicated process to offer limited advice. I think that will be a fantastic change for the client.” Part of the appeal lies in making advice more attractive and valued to more Australians and in changing the statistic that continues to plague the financial advice industry – that only one in five Australians receive formal financial advice from an adviser. “How do we convince the other four people that there’s value in pursuing advice?” BGL General Manager Daniel Tramontana says, “How do those other four make those decisions?” macquarie.com.au/smsfroundtable