In the no good, very bad old days, the financial planning industry was unregulated. That meant that anyone could hang a shingle on their door saying ‘financial planner’.
This led to some poor outcomes for consumers who were unaware that their insurance or superannuation broker was receiving a ‘trailing commission’ annually deducted from their account. Even worse was when planners directed members’ investments into poor performing funds because they (the planners) received a higher commission. This led to numerous scandals relating to the loss of members’ money and left a scar on the financial planning sector.
As a result of this unsavoury situation, the government imposed new regulations on the industry over a period of years, which required financial planners to be certified through training, examinations and university degrees in a related subject such as Finance, Economics or Accounting. When these new requirements became law, many financial planners left the industry, leaving a shortfall of professional, registered financial planners. However, true professionalism for financial advisers was created.
With the build-up of superannuation balances, Australians are increasingly in need of financial planning advice. Up to now, super funds have been limited in what advice they can provide to members – ‘general product advice’ only can be provided as an estimated five million Australians approach retirement. This ‘intra-fund’ advice offered by super funds includes guidance on contributions, insurance needs analysis and investment options in relation to their own fund only, being the only personal advice allowed without the member having to pay a fee.
Financial Services Minister, Stephen Jones has recently announced measures (not yet legislated) to make financial planning advice more affordable and available through superannuation funds. This is a welcome measure which in essence is an expansion of the intra-fund advice previously available to members. When legislated, the Quality of Advice Review Recommendations is expected to enable super funds to look at members’ overall financial situation more broadly when providing advice.
In addition to the broadening of advice provided by super funds to members, emerging AI technology may be used to provide help to members. This could assist members who are looking for an additional level of online clarification of technical superannuation and financial planning concepts. However, despite early indications of promising outcomes, it is unlikely (at least in the initial implementation of AI) that members would be able to generate a trustworthy full financial plan without the involvement of and advice from a licensed financial planner.
A review of how your super is invested is important. A tweak of your asset allocation at age 30, 40, 50 or 60 may change the overall account balance you have when you finally retire. The spectrum between high growth, moderate growth, conservative, and cash investment options is enormous. Depending on your age and appetite for risk, your asset allocation may change throughout your working life. And your insurance needs will certainly change! Sound advice from a registered financial planner can help you adjust both your investment strategy and your insurance cover to suit your needs.
NGS Super offers financial planning to members to assist them in their decision making via several channels. Intrafund advice is available to all members at no cost via the member online portal or through the NGS Super Helpline. You can also access a comprehensive advice service through their employed financial planners. All the financial planners are licensed and work on a fee-for-service basis. This means that members pay literally for the hours worked to produce the plan. That’s the cost! There are no commissions paid to planners and no more of the evil ‘trailing commissions’. For members with relatively simple questions who don’t need a full plan, general advice is available via the Helpline, NGS Super Specialists or NGS Financial Planners.
The reforms under the Quality of Advice Recommendations will indeed help millions of members receive the advice they need on questions such as, ‘How much will I need for retirement?’, ‘How long will it last?’, ‘Should I put more into my mortgage or into my super?’, ‘Is my insurance right?’.
The NGS Super Helpline can be reached on: 1300 133 177. A call centre consultant will then direct you according to your needs to a phone advice consultant, a super specialist or a financial planner to assist you. The world of superannuation is certainly complex and the world of insurance is not always easy to comprehend so think about the benefits of professional help.