Speaking at the Financial Services Council summit last week, Department of Treasury retirement income policy head Robert Jeremenko said comprehensive income products for retirement (CIPRs) should be built to allow clients to purchase them without receiving advice.
The government is currently working with consumer and industry groups to develop CIPRs aimed at addressing super fund members’ needs in retirement through annuity-style products.
According to Mr Jeremenko, these products should be available for sale without a requirement for clients to seek advice.
“The government wants to establish this in a way that the offer of a CIPR would not be financial advice, so that means we need to look at what the definition of intra-fund advice is going forward to accommodate that,” he said.
“In and of itself, the offer of a CIPR is not financial advice.”
However, speaking to Nest Egg sister site ifa, Lifespan Financial Planning chief executive Eugene Ardino said deregulation of CIPR advice is “not in the public interest” and could be damaging for retirees.
He explained that while anyone can invest in a product without advice, regulators’ role is to dictate who can advise on certain products and who cannot.
“So, what Treasury seems to be suggesting is that it be possible for anyone to advise on these investment products, including the person trying to sell it,” Mr Ardino argued.
“If you go with this suggestion then you would have the sales team of a super fund trying to sell these products to retirees and I’m sure I don’t need to explain the problems with this model.
“If you want to structure CIPRs so that clients won’t need advice then structure them so that they are simple, which is difficult as they are complex instruments.”
He said it won’t be any easier to stop savers from receiving CIPR advice than to force them to seek advice.
“All you can do is decide who can and cannot provide that advice and there is just no good reason to say that anyone can advise on CIPRs,” Mr Ardino said.
In line with Rice Warner’s calls for CIPRs to be classified as financial products, Mr Ardino said they shouldn’t be available without advice from qualified advisers – and not super funds’ sales teams.
“Let the fund provide objective factual information, which is allowed of any financial product, but leave the advice to advisers,” he said.