Philip Kewin

The Association of Financial Advisers (AFA) welcomes the release of the 2017/18 Federal Budget.

• In welcoming these initiatives, the AFA believes the complexity to flow from the first home  super saver scheme and the $300k incentive for downsizers to boost retirement savings continues to highlight the need for Australians to seek quality financial advice
• The AFA therefore continues to call for financial advice to be tax deductible
• The AFA believes the public will welcome the introduction of accountability measures for bank executives as it extends the trust being created through financial advice professional standards reform
• The AFA is disappointed at the lack of specific measures to improve the financial well-being of women and will be lobbying the Government on the issue
• AFA CEO, Philip Kewin said some of the specific measures announced in the Budget tonight, which are designed to boost the retirement savings of older Australians and help people buy their first homes, underscore the need for financial advice

“We welcome the downsizing incentive allowing older Australians to make a  contribution of up to $300k to super after selling their home. This is recognition of the need for retirees to free up capital to invest for retirement income,” he said. “Invested correctly, this is likely to help many retirees enjoy a more comfortable and sustainable retirement, while simultaneously delivering more supply to the residential property market. So more than ever, the right investment decisions need to be guided by a professional financial adviser.

The introduction of the First Home Super Saver Scheme, allowing first home buyers to make contributions of $15k per annum and $30k in total within existing contribution caps to their superannuation funds to help them purchase their first homes, is a welcome incentive

“Purchasing a home is an important step in wealth creation and the AFA congratulates the Government on the establishment of the Scheme and potentially making home ownership more achievable for more Australians,” Mr Kewin said. “But this comes with quite a marked change in the required investment approach, with a ‘dual’ investment strategy of short term funding for housing, and long term funding for retirement. Understanding these principles and ensuring the right investment strategy is in place is critical and requires professional advice. These issues have again highlighted the need for professional financial advice to be tax deductible and the AFA will  continue to call on the Government to legislate this.

Mr Kewin also said the AFA is pleased to see the Government introduce a Banking Executive Accountability Regime impacting banks and their senior executives

“Over the past five or more years, the financial advice profession has been raising the bar on professional standards and accountability. We congratulate the Government for extending these measures to the senior executives who play a pivotal role in shaping the behaviour and culture of our major institutions as we believe they will further strengthen consumer trust in the financial services profession as a whole.”

One lost opportunity the AFA has identified is the lack of any real measure to address the financial well-being and significant retirement savings gap among women. “On average, Australian women have significantly lower retirement savings as they often earn less and ongoing superannuation contributions are often punctuated by family leave. They are therefore at greater risk than men of living in poverty at every stage of the life cycle, but most significantly in retirement,” Mr Kewin said. “The AFA, through its advisers and the AFA Inspire program, already takes an active role in improving financial outcomes for woman and  will continue to lobby the Government to provide more incentives to address the retirement incomes gap.”

Read the AFA Budget Summary.

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