Michelle Levy, Quality of Advice Review

There has been a multitude of reports and reviews into financial advice. 

Whilst the intentions are no doubt honourable, some of them can seem long winded or incomprehensible to ordinary Australians who are trying to wrangle living expenses as they transition to retirement.

Take, for instance, the recently released Levy Review into the Quality of Advice. You may need to hang in here to understand this one. 

It was recommended in the findings of the 2017 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. That’s a mouthful in itself, let’s just refer to it as the Hayne Royal Commission after its commissioner, Kenneth Hayne.

In its findings, the Hayne Commission recommended a review into the laws and regulations on financial advice.

Senior lawyer, Michelle Levy, was tasked with this review.

In December 2022 she indicated that she would present more than 20 findings, which were formally tabled in earlier this year.

Two weeks ago, Assistant Treasurer and Minister for Finance Services, Stephen Jones, announced a consultation process on the Levy Review findings. Yes, we are now consulting on a review recommended by a Royal Commission!

Why are we hastening, slowly?

There is a reason for this cautious, multi-stepped approach.

The outcome from Michelle Levy’s recommendations matters a great deal. And it matters particularly, for the millions of Australians who need some help to make decisions on what should be straightforward financial matters, but are so complex that professional financial support is their only recourse. And for the large part, such support is extremely expensive.

But there is some good news as well.

There are affordable, tailored financial solutions which enable retirees to get specific, ‘bite-sized chunks’ of advice for a few hundred dollars, rather than the fees costing an average of $3500  that the Levy Review has highlighted.

Here’s a brief overview of the review and what it might mean for you.

What did Michelle Levy find?

In short she found that ‘the regulatory framework for financial advice is complex and difficult to understand’. Bearing in mind that Michelle Levy is a senior law partner, I am not sure how those of us without years of legal expertise are supposed to tackle this complexity!

The review investigated whether there had been a qualitative improvement in the provision of advice, and the answer was yes. The full list of recommendations can be read here.

Which recommendations matter for retirees?

The main review recommendations aim to simplify the provision of advice, but some aspects of this ‘simplification’ could mean a change in wording of for advisers to put ‘clients best interest’ first to just ‘give good advice’. It also means a relaxation of rules on who can give advice which gives tacit support to Artificial Intelligence or fintech solutions.  

Is this likely to trigger more trustworthy or reliable financial advice?

Therein lies the debate. Whilst financial institutions seem supportive of the notion of less regulation, paperwork and a simple definition of advice, consumer groups are not so keen. In fact a spokesperson for Super Consumers Australia (a division of Choice) stated that some proposed changes could be ‘a recipe for another Royal Commission’. 

But wait, there is some good news!

Whilst so-called financial ‘experts’ slog it out over the meaning of advice and how much information an adviser needs to provide, the recent Retirement Essentials Retirement Pulse provides evidence that actual retirees value advice highly and that they can see real gains from having taken advice.

In the January 2023 Retirement Pulse, of 557 responses, 73% had sought advice.

Of this number:

  • 43% said it had resulted in greater confidence and control of finances
  • 42% felt reassured that someone more expert was checking the fine print on their behalf
  • 28% were please to access financial products they felt they would not have found on their own
  • And 22% believed that the advice had allowed them to avoid costly mistakes

(*note – respondents could choose more than one benefit)

Affordability remains key

In 2020 the median fees for financial advice per annum was close to $4000, according to the Levy Review. For most retirees with median super balances, at retirement age, of $189,000 for men and $180,000 for women, this is a lot of money to chance, predicated on the understanding that the advice received will be valuable and worth more than this investment.

Offering relevant and affordable advice has been the goal of Retirement Essentials from day one of our operation. Initially this involved providing support to those seeking the Age Pension or the Commonwealth Seniors Health Card.

But we quickly realised that it is the provision of issue-specific, one-on-one tailored consultations for fees less than one tenth of those quoted in the Levy Review (i.e. $330 instead of $3700) which is most needed by those trying to wrangle pension entitlements, superannuation laws, tax benefits and private savings into a cohesive retirement income stream.

Head of Advice at Retirement Essentials, Alison Squire, notes:

We have already addressed this need. Through a combination of tailored online tools, calculators and booking in with one of our qualified financial advisers who offer ‘bite sized’ affordable retirement advice consultations.” 

What type of advice might you need?

You might have some more specific questions that you want help with to determine how an alternative strategy could affect your financial position and your ability to achieve your goals. Retirement Essentials offers financial adviser-led strategy consultations on a range of topics.  You can join one of our financial advisers online where they assess your current situation and show you what an alternative option may look like.   The following links will enable you  to book a tailored strategy consultation that best suits your particular needs:  

Also, our general introductory consultations are designed to help people understand their initial needs and goals in retirement.  You can book a consultation below.

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