The complexity surrounding the superannuation system means people often need advice but still struggle to get simple answers to their questions due to the current financial advice regime, according to Quality of Advice Review chair Michelle Levy.
Addressing the media and financial services industry representatives yesterday, Levy said at the outset of the review she did not believe superannuation was an area that needed much advice, but has shifted her view during the course of the review process.
“Somebody asked me early on whether the superannuation system we had meant that advice was more or less important and I said at the time that I thought it was less important because there is a really good default setting,” she said at the PritchittBland Communications event in Sydney.
“I’ve completely changed my mind. There are so many decisions that need to be made. There is so much uncertainty and nervousness and anxiety that people do want advice about their superannuation because even if the default product is good, they don’t know that.
“They need confidence and think all of these changes make advice more relevant and more important.”
She also noted the difficulty for consumers in seeking answers to simple questions regarding their superannuation and the worst outcome would be no changes being implemented to the current advice model.
“The worst thing that could happen is nothing happens,” she said.
“[Take] the superannuation fund member who doesn’t know whether they should be making an additional contribution, doesn’t know about changing to another investment strategy, doesn’t know about what insurance they should have.
“[Consider] the person who rings their bank and asks: ‘Should I have a term deposit?’ and the bank says: ‘We can’t give you advice, but you might want to go and see a financial adviser.’
“This is everywhere. No one can get a direct answer and the more complicated the world gets and there are fewer people that you can go up to and you can’t get an answer and you need help. It’s really bad and that is my worst nightmare that this just keeps going.”
