Financial Advice Should Be Free. Or Close To It. And the Government Should Pay.
Updated: 6 days ago
Financial advice should be free, or at least subsidised, and the federal government should be the one funding it.
Not as a thought experiment. As an actual policy, because they made every Australian need it. They have a responsibility to help out where it counts.
Superannuation is one of the best retirement systems in the world. I'll defend it to anyone who says otherwise. But it's complex enough that most people who rely on it have no real hope of understanding it without help.
Concessional caps. Non-concessional caps. The transfer balance cap. The bring-forward rule. The work test. The interaction with the Age Pension, which has its own asset test, its own income test, and its own way of quietly punishing people who get the order of operations wrong. Nobody built this system to be understood by the person it's meant to serve. It just ended up that way through decades of changes and tweaks.
That pool of money is often the biggest asset a person will ever hold. It's not optional. The government forces every working Australian into it by law. And then it walks away. Funds offer a PDS and maybe a calculator, and if you call a fund for some advice, it is inherently biased if they give it at all.
If you force someone into a system this complicated, you owe them a way to navigate it.
So who's supposed to close that gap? Right now, the answer is: whoever can afford $3,500 to $5,000 or more, for a Statement of Advice. Which means an entire industry, our industry, has organised itself around the people who need us least. There are advisers who will only ever work with people who already have money. I understand why. The compliance load makes anything else commercially reckless. But understanding why doesn't make it right, and it doesn't make it someone else's problem to fix.
What would actually make a difference? Give advisers a genuine option to deliver free or subsidised advice, funded by government, for people who couldn't otherwise afford it. Pay us properly for it, the way a GP gets paid for a bulk billed appointment. Not a token gesture. A real fee, for real work.
I know the objection already. Where's the money coming from. Fair question. I haven't costed it, and I'm not going to pretend that I have (How do you tag Treasury?). But I'll say this: governments find money for the things they've decided matter. They found it for JobKeeper in weeks. They find it every year for programs with a weaker claim on urgency than whether people retire with dignity or with anxiety. There's always money for programs a government believes in. This one just hasn't been believed in yet.
There's also a genuine argument that good advice isn't pure cost. Someone who gets proper help in their thirties, or their fifties, or the year before they retire, tends to lean on the Age Pension less later. I can't hand you the modelling. I don't think anyone's built it. But I'd rather throw the idea out unfinished than not because it isn't costed yet.
'Use money well' isn't just a line I use with clients. I'd like to put it to whoever writes this policy too. Right now the system hands people the most complicated financial decision of their life, forces them into it, and leaves them to work it out alone.
Someone works all their life, gets a regular pay check, reaches the milestone of retirement and is suddenly asked to make decisions about sums of money they have never had control over before. And they find the system isn’t easy, it’s really fucking complex, not something they have been educated or trained to deal with.
I don't think that's fair. I don't know exactly what fixes it. But I know we can't keep pretending it's fine.
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Ben Graham-Nellor is a financial adviser and founder of Smart Happy Money, based in Melbourne. He writes about building a more human, more inclusive financial advice industry.