Insights from the ‘Financial services in the Morrison Government – what are the implications?’ session at The Summit 2019.
By Lachlan Colquhoun
.
An increasing number of Australians will be retiring at a time when the number of financial advisers is shrinking and the investment markets are uncertain.
This was one of the observations to come out of a panel session with the subject ‘Financial services in the Morrison Government – what are the implications?’ at the FSC Summit.
Bryce Doherty, the CEO of UBS Asset Management Australia told the session that one of the “unintended consequences” of the Hayne Royal Commission was that advisers would leave the sector and, despite moves to reform and professionalise it, fewer people would now be drawn to the industry.
“I also think it’s a pity that the banks are getting out of advice,” said Doherty.
“What the banks haven’t been able to convince people of is that there are benefits in a vertically integrated model, because that is how advice can be paid for.”
While, in a show of hands vote, a vast majority of the Summit audience believed that implementing the Royal Commission recommendations would make the financial industry stronger, there were some areas of doubt.
Graham Hand, the managing editor of Cuffelinks, told the panel there were some things “which the Royal Commission did not focus on” which were still vitally important.
He pointed out the example of product pricing, where providers “take advantage of existing customers while new customers are offered better deals.”
“With a home loan, you will almost certainly do better if you go to your lender and demand a better deal, but why is that not available,” Hand asked.
Another paneLlist, HSBC chief economist Paul Bloxham, said a feature of the medium term future was that the world was set for an extended period of low interest rates.
“This reshapes the way you get returns from assets in the investment universe and the fixed income universe,” he said.
In this climate, investors seeking higher returns would be forced to “shift up the risk spectrum” to invest in other asset classes.
This would have an impact on superannuation and retirement incomes, because although Australia was “well ahead” in building a pool of retirement savings compared with many other nations, this could be undermined by an extended period of lower returns.
“If we are facing a world where it is harder to get returns, it may turn out we don’t have enough savings, so that is something we may have to seriously consider,” said Bloxham.
“I don’t think this is a fleeting moment. It is a world we are set to live in for some time.”
Cuffelinks’ Graham Hand agreed that while superannuation was a “great experience” for many people, he also believed it may be appropriate to raise the savings rate.
“If we force people to save more in that environment, well more power to it,” he said.
“It’s a great system and its time we stood and said that.”
One Nation Senator Malcolm Roberts, one of five Senate cross-benchers who are subject to significant lobbying because their votes are critical to legislation passing or not, fielded a question from the audience on lobbyists, and how he deals with them,
“Some lobbyists are wonderful and give really useful advice, very very helpful, they’ve done their research and provide us with facts and data and anecdotes which we can use,” Senator Roberts said.
“So many are not, they just take up time. Parliament House is a zoo. It’s just full on from the morning to midnight, whenever it ends, and it’s not the right place to have a decent conversation”
He said he preferred to “spend a lot of time out in the community listening, because that is the best place to learn.”
.