NCAs unlikely to solve retirement advice gap: HUB24, CFS

HUB24 and Colonial First State (CFS) say the New Class of Advisers (NCA) will unlikely solve the retirement advice gap Australians face, noting the focus needs to be on helping reduce friction for those with complex advice needs.

Assistant treasurer Daniel Mulino announced the reforms in August, which will allow super funds and life insurers to use the NCAs to give members simpler, more affordable help with their retirement, without the cost of full personal advice.

Speaking at the Financial Services Council (FSC) Retirement Summit in Sydney last week, HUB24 chief executive and managing director Andrew Alcock, however, pointed to the growing number of Australians reaching retirement and a shrinking advice workforce.

"Looking at the number of people who are retiring, with an advice workforce of about 15,000 in the country, down from 25,000, it's those advisers who are dealing with that very complex issue that's very real right now. That, I think, is an important focus area for us - to make sure we reduce friction," Alcock said.

"Let's do NCAs, but let's also reduce friction in that part of the market... Because that's where the real need is, and that's where the real risk of us not getting the value out of the great system we've built."

CFS chief executive of superannuation Kelly Power said she has a "fundamental problem" with the fact that it's only available within the product sphere.

At present, the scope of the NCAs is only applicable to superannuation funds and life insurers.

The Financial Advice Association Australia (FAAA) has advocated strongly to expand its scope to all financial advisers.

"When you think about what's actually going to help people, it's getting access to Centrelink, it's looking at whether or not you sell your home... We know that about a third of Australians are retiring with debt now, and so the NCAs can't do any of those things," Power said.

"But people are going to need help if you don't have a primary property and you have debt and going into retirement. There are really complex issues.

"What I would like to see is a world where we're actually solving the real problem, which is how do we help advisers and financial advice licensees get more people through the door, more advisers into their business, but also be able to help more Australians."