Improved Ability For Super Funds To Give Personal Advice
One of the ways that these reforms will make financial planning more affordable is by greatly improving the ability of super funds to provide personal advice to their members. Currently, members can only get guidance on retirement and asset allocation in relation to their own accounts. However, once the reforms become law, funds will be able to take a broader view of a member's family situation and overall financial circumstances. This means looking at factors such as age, income, spouse's income, number of dependents, mortgages, and other debts. Members will then receive advice such as "Why don’t you pay off your mortgage?" or "Have you thought of making extra super contributions?".
The change is expected to help people plan better and recognise the fact that people retire as households, not individuals. With emerging AI technology, super funds will now be able to offer a higher level of advice to members who wouldn't be able to afford the expense of hiring a personal financial adviser. AustralianSuper CEO Paul Schroder stated that "This is a positive step forward for millions of members, as they will now be able to access the level of financial advice they require."
Planning Costs Will Also Fall
Another way these reforms will improve affordability is by reducing the cost of using personal financial planners. Currently, the cost can range between $3500 and $4500 for a plan, but the new reforms will cut much of the red tape involved in preparing financial plans. According to Financial Advice Association of Australia CEO Sarah Abood, the system created is very complex, adding to the cost of advice. "Many hours are spent preparing documents that can be literally duplicated up to nine times in a year," she said. The changes will streamline the process, making administration less expensive; thus, Ms Abood expects that it will have the effect of lowering the cost of advice.
Getting Value from Financial Advisers
Despite the cost, financial advice can be very valuable for those who receive it. Therefore, it is important to ensure one gets as much value as possible from using a financial adviser. This involves being clear on what your goals are when you see a planner, according to Steps Financial principal Antoinette Mullins. That way, strategies can be developed for achieving those goals may they be saving for a mortgage, reducing an existing mortgage, reducing tax, or finding ways to boost one's super. According to Mullins, financial planning is about using strategies and the system to get further ahead in life. She also emphasises the need to identify what you can do yourself and what requires a planner's expertise.
She further highlights that every Australian needs some sort of financial advice, even though the level, duration, and complexity needed differ greatly from person to person.
Ultimately, these new reforms to financial planning through superannuation funds promise to make advice more accessible, affordable and valuable to all Australians so they can achieve their financial goals.
