In this guide
Australians are reluctant to seek professional advice, even when they acknowledge they need it. According to the Investment Trends 2023 Financial Advice Report, almost 12 million Australians have unmet advice needs.
For past generations, financial advice was not such an issue. The average Australian worked, bought a house, raised a family and retired on the Age Pension. But the introduction of compulsory super changed all that.
Now every Australian with a super account is exposed to capital markets and the impact of market twists and turns on their account balance. We are also encouraged to fund our own retirement, so the performance of our super, how it intersects with the Age Pension, other investments and constantly shifting super rules really matters.
The growing complexity of our retirement system means most people will need advice to get the most out of their super and plan for retirement.
A matter of trust
The main reason people give for not seeking financial advice is cost, as rising fees and falling adviser numbers put advice out of reach for many Australians. Industry estimates put the initial cost to set up a plan at anywhere from $4,000 to more than $10,000. But trust is also an issue.
The Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry seriously dented the reputation of the advice industry. The commission unearthed conflicts of interest where advisers were rewarded for selling certain products whether they were in the client’s best interests or not, as well as systematic overcharging, hidden fees, and fees for no service.
Despite recent reforms, the industry has a way to go to regain the community’s trust.
The good news is that there is excellent, free advice available from government and community organisations, and your super fund may also be able to offer you limited advice without an additional cost.
In this article, we cover the advice that may be available from your super fund, the government’s free Financial Information Service, tools available from the Australian Securities and Investments Commission (ASIC) via the Moneysmart website and financial counselling services for those in financial difficulty.
Advice from your super fund
Many super funds offer their members simple advice at no additional cost by charging all members collectively for the advice service via administration fees. This service is known as intra-fund advice.
Intra-fund advice can only be about your super in that fund. It can’t be about comparing funds and consolidating your super, or about other products.
Common topics covered by intra-fund advice services are:
- How much insurance cover you might need to consider holding in the fund
- Which of the fund’s investment options would be most suitable for you
- The most effective way for you to make super contributions.
These services may be provided over the phone, online or via a website calculator. A Statement of Advice (SOA) will be generated that explains the advice you have been given.
It is important to know that these services are designed only to give simple advice. For example, when giving contributions advice through this service your fund will ask how much you can afford from your take-home pay to contribute to super. The adviser can then calculate whether you should make those contributions by salary sacrifice, personal tax-deductible contributions, after tax or a combination of these to make the most of tax savings and any government co-contribution you are eligible for.
The adviser can’t generally suggest an amount for you to contribute based on your income and expenses or advise on whether you should prioritise other aspects of your finances like debt repayment before considering super contributions. The advice is given on the basis that you have already decided to contribute and know what you can afford.
The Financial Information Service
The federal government’s Financial Information Service provides free information and education on a range of financial issues, from investing to superannuation, retirement planning, the Age Pension and aged care. The operative word here is ‘information’.
The service can’t offer personal financial advice, free or paid, because it isn’t licensed to do so. That means it can’t sell or give advice, prepare a financial plan, recommend investments, tell you how to invest your money or recommend a financial adviser.
But sometimes, information is all you need to make your next financial move or lifestyle choices.
What FIS can do is explain:
- How to make informed decisions about your finances
- The risks of certain financial products
- How you can increase your overall retirement income
- The roles of financial professionals
- How a change to your personal circumstances may affect your financial situation, in the short and long term
- How to find resources to help you with your financial matters
- How to choose a financial adviser (but FIS can’t recommend an adviser).
FIS is operated by Services Australia. It is open to anyone of any age – you don’t need to be a retiree or on Centrelink benefits.
You can phone and speak to a FIS Officer (FISO) or make an appointment for a free face-to-face consultation at your local Services Australia service centre. You can take someone along with you, allow someone to speak on your behalf (subject to signing an authority naming them as your representative) or request an interpreter.
FIS also holds regular webinars you can attend live or watch later via a recording. Topics include planning for retirement, understanding superannuation, the Age Pension, retirement accommodation options and aged care fees and charges.
I attended one of these sessions on the Age Pension to see first-hand how useful they were. At the very least, it provided an opportunity for the people who attended to start their information gathering, ask questions and identify issues to follow up, perhaps with a face-to-face interview with a FIS officer or their financial adviser.
Contact details
- Call 132 300 and say “Financial Information Service” to arrange to speak with a FIS officer over the phone, by video chat or in person
- Visit the Services Australia website to book a free live webinar or watch a pre-recorded session
For more information on the service, as well as online financial tools and guides, check the Services Australia website.
ASIC Moneysmart
The Australian Securities and Investments Commission (ASIC) maintains a consumer website at moneysmart.gov.au. While the site can’t provide advice in the form of recommendations, it does offer calculators and tools that can help you to make your own decisions.
The benefit of this service is that it is independent of any product providers and is designed only with your interests in mind.
Available calculators include:
- A budget planner
- A super calculator that estimates your final super balance and shows the effect of fees
- A super contributions optimiser that calculates the type of super contribution that will give your super the biggest boost
- A retirement planner that estimates your retirement income based on your contribution level
- An account-based pension calculator for people close to retirement to estimate how long an account-based pension would last, based on your chosen annual withdrawal and product fees
- A reverse mortgage calculator
- A managed funds fee calculator
Financial counselling services
If you have lost your job, are weighed down by debt, or are struggling to pay household bills for whatever reason, help is at hand.
Financial counselling services offer free, independent and confidential information, support and advocacy to people who are facing financial difficulty. They also provide support for people suffering more complex issues such as domestic violence, financial abuse or problem gambling.
These services are provided through a network of local community organisations, legal centres and government agencies.
If you need help sorting out your money problems, or assistance in developing a budget to repair your finances, you can access services over the phone, online or in person.
To access free information over the phone, or to get a referral to a provider of free face-to-face services in your area, contact the Financial Counselling Australia National Debt Helpline.
The service also offers a range of user-friendly, step-by-step online guides.
Contact details
- Call the Financial Counselling Australia National Debt Helpline on 1800 007 007.
- Go online to www.ndh.org.au.
- Visit the Moneysmart website to find a financial counselling service near you.
The bottom line
Free advice is hard to come by, but your super fund is a good place to start. If intra-fund advice is offered, you can access it at no additional cost.
ASIC’s Moneysmart website is full of useful guidance and self-help calculators.
If you feel you need financial information or counselling, free services are available from the government’s Financial Information Service or the Financial Counselling Australia National Debt Helpline.
