The $82,000 question

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 Industry funds research which asserts that consumers would be $82,000 better off in retirement if they did not pay fees to financial advisers is simplistic; fails to take into account the impact of strategic financial advice and is a blatant attempt to shift attention away from industry funds’ own opaque administration fees, according to the Association of Financial Advice (AFA).

“The $82,000 is a number the industry fund movement calculated for a forty year period,” AFA National President Brad Fox said. “That’s less than the cost of a cup of coffee and a biscuit a day. And yet the difference that strategic financial advice can make to a client’s financial situation over the same period of time can translate to much higher superannuation balances and significantly better protection against the financial impact of early death, disablement and serious illness.”

Mr Fox said the industry funds rhetoric purposely ignores the impact and value of strategic financial advice – advice which takes into account a client’s overall financial situation and unique needs – in order to further its own agenda.

“It is quite evident from our Back to Basics consumer research that there is no consumer crisis in confidence in financial advice,” Mr Fox said. “The industry funds are, yet again, crying wolf.  We believe that Australians are much too smart to fall for it.”

Back to Basics, issued last year, revealed that consumers who receive advice not only highly value that advice, but are better off.

“The industry funds movement’s continued attack on financial adviser remuneration is an attempt to deflect attention away from its own member administrative fees,” Mr Fox said. “It is hypocritical on their part to argue for transparency around adviser remuneration when they do not themselves disclose how they are spending the admin fees they charge their members. As they are not-for-profit, they must be using admin fees to fund their multi-million dollar advertising campaigns in print and on TV. It’s hard to see how this use of money ‘profits members’.”

Mr Fox also argued that members’ fees must also be being used to pay for the provision of intra-fund advice. “The wages of call centre advisers providing intra-fund advice to members must be paid somehow. If not from members fees, then how?”

Mr Fox said it is time for all parts of the industry to work together. “While the industry spends a lot of time and money naval-gazing and polling consumers, the people of Australia continue to face much bigger issues – they are still grossly under-insured and have very little set aside for retirement. It’s time we all pulled together to help address these issues.”

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