Stephen Jones: Better advice, better financial outcomes

Financial Services Minister Stephen Jones recently announced recommendations to the financial advice sector, highlighting the importance of providing accessible and affordable advice to more Australians. This is welcome news and something the team at Otivo has been working hard to achieve for several years — helping Australians be better off.

While we expect the consultation period to stretch over several months, the message is clear — superannuation funds are now expected to provide personalised advice. To achieve this at the required scale, digital advice will be critical. The challenge now is how these institutions choose to implement advice for their members, and how quickly they can do it.?

In his speech, Minister Stephen Jones mentioned “The benefit of digital advice is that it enables the client to receive helpful advice at a time and place that suits the client. In the superannuation context, I envisage that funds will look at embedding these digital tools into their advice services.”

This is a step in the right direction, but we know it will take some time before members can start seeing the benefits. Many Australians are already anticipating these benefits from their funds, as revealed in our latest Superannuation Report in October:

• 9 out of 10 Australians would like their superannuation funds to provide advice on issues that affect their ability to add to their superannuation fund
• 79% of Australians want their superannuation fund to be more proactive in providing advice

The good news is that Otivo has a proven digital solution already being used by some superannuation funds and their members. Earlier this year, we introduced new functionality that enables super fund call centres to provide access and guide members across all areas of advice for a member's super fund. It’s the scalable solution that Minister Jones is referring to in the proposal for better advice, and better financial outcomes.

The next hurdle that superannuation funds need to overcome, as a result of the obligations the government is placing on them, is how they can provide personal financial advice, at scale to reach all members. While keeping in mind the goal to deliver appropriate advice for each individual member's unique situation.?

The recently announced proposals from Minister Jones will provide the clarity and comfort that many super funds have been seeking to adopt a mixture of personal digital advice and phone-based assistance to their members.?

For example, a member now has the option to start their advice journey independently by using a personal digital financial advice tool from their super fund —?regardless of whether their focus is on improving their current situation or planning a more comfortable retirement.

The platform would allow them to review one area of concern in their finances, or go deeper and look at all aspects of their financial life such as debt, super investments, super contributions, insurance and savings goals. For many Australians, this will be a very valuable start to improve their financial situation and help with financial literacy.

But for others, there may be one or two areas where they have some additional questions. This is where they can now pick up the phone and have the confidence to speak with their super fund and know their questions can be answered. The members' experience will be enhanced further, as the super fund can also have access to their members' personal digital plans and offer further guidance and assistance across more areas of their financial life.

Reflecting on the government's proposal, it's fantastic news that they’re "modernising the best interest duty," as this emphasises the ongoing commitment of advisers to prioritise their clients' best interests. However, certain details, like the definition of "qualified advisers" still need to be clarified. The requirement for these qualified advisers to be employed by a licensed financial institution, where the employer takes responsibility for their actions, raises questions. I can only assume that the employer or trustee would want to establish sufficient guardrails to ensure their "qualified advisers" consistently act in the best interest of clients.

In summary, it's a fantastic step forward that the underlying theme of these proposals is to make financial advice more accessible and affordable for Australians. I look forward to the details and consultations over the coming months to make the goal of advice becoming more accessible and affordable a reality.