The issue of not receiving financial advice outweighs the problem of the delivery of poor advice, the head of the largest SMSF industry body has said.
“I think there’s a bigger problem than poor advice [and that is] lack of advice. I think there are far more Australians that are missing out on valuable results [and] valuable outcomes because they don’t get any advice, because they’re afraid to get advice, compared to those who actually suffer from poor advice,” SMSF Association John Maroney said during a recent XY Adviser podcast.
To demonstrate this point, Maroney shared a situation he learned about last year with regard to certain retirement benefits.
“A classic area [where] I saw this was [during] a presentation last year [where] they were looking at stats [as to] how long it takes for someone eligible for the age pension to actually get the age pension,” he said.
“It was something like over 12 months for people who are turning 65, 66 or 67 on average because of the process [involved].
“[So] they are missing out on six, 12 or 18 months of age pension because it takes that long to work through [the process] with Centrelink [and other agencies].”
By his calculations, single people eligible for the age pension would on average be missing out on around $24,000 and a couple $36,000.
“That’s crying out for better advice [and] a better system,” he said.
With regard to the vertically integrated advice model, often linked to the provision of poor advice, he suggested the consumer should have the ultimate say when determining the future of this practice.
“ASIC (Australian Securities and Investments Commission) has now got more power [over] the design and distribution obligation arrangements so they can more carefully, and proactively, look at areas where they might think there are risks to consumers or egregious behaviour,” he said.
“[But] I think it’s better for the marketplace to sort that out through the lens of what’s best for the customer.”
According to Maroney, allowing market forces to play their part in determining the future of vertical integration will still allow the ability for individuals to receive their financial advice from one source rather than having to visit several different organisations to potentially achieve the same result.
Financial advice, poor advice, age pension.