Investment giant Vanguard has no plans to expand its financial advice offering despite pushing for the Quality of Advice Review changes to give super funds more flexibility over the advice they provide to members.
There are growing expectations that digital advice will become a core part of Vanguard’s Australian offering, given it operates a thriving robo-advice business in the US, but Vanguard Australia managing director Daniel Shrimski tells Investment Magazine there are no plans to get into advice.
“Tools, calculators, very simple stuff – that’s something we’ll look at depending on where things go because there are still a lot of questions to be answered with Stream 2,” Shrimski says, referring to the second tier of the government’s QAR response, which intends to expand the boundaries of advice super funds can offer.
“In terms of putting up digital or robo or a hybrid type solution, that’s not what we’re doing, we have no plans for that.”
He adds the intention is to maintain its strong working relationship with the adviser community.
“Vanguard works with 70 per cent of financial advisers in Australia, so it’s a huge part of our business, it’s the economic backbone of our business,” Shrimski says.
Vanguard, which launched its super fund last November, is supportive of the first two streams of the QAR response but believes that any advice should be given at a household level.
“That’s how age-based pension should be calculated – it feels like we’re struggling to understand how you can offer advice without considering outside of superannuation assets,” Shrimski says.
“We feel strongly about that, we’ve advocated for that in terms of work we’ve done with relevant ministers.”
But while Shrimski says he is supportive of super funds giving more advice, that Vanguard would be more likely to refer to its extensive network of independent financial adviser partners.
“[And] having that ability to pass off to a financial adviser that can provide comprehensive advice and also that behavioral coaching element which is obviously critical to any financial adviser relationship,” Shrimski says.
While advisers have aired grievances towards about the government’s willigness to expand super fund advice under Stream 2 of the QAR, Shrimski says these concerns aren’t raised by the advisers he engages with.
“I spend a lot of time with financial advisers – whether it’s in group settings or one on ones – and I’m constantly trying to understand from their perspective where they have concerns,” Shrimski says.
“To be honest, I didn’t hear a lot of concern. I think most financial advisers would agree this is going to be a good thing for Australians where more are going to be able to access advice.”
When it comes to fulfilling its obligations under the Retirement Income Covenant, Shrimski says Vanguard will have its pension offer in market by the end of the year.
ASIC and APRA lambasted the industry response to the covenant, criticising the industry’s lack of preparedness a year after the obligations were introduced.
Minister for Financial Services Stephen Jones told the Retirement Conference, an initiative of Conexus Financial and the Conexus Institute, in August that the government expected funds to give some form of advice to members in order to meet their obligations under the covenant.
Shrimski says the pension product will be offered across advised, non-advised and self-directed channels.
“It certainly appears out there a lot of the super funds are struggling to actually access the data and actually come up with these cohorts,” Shrimski says.
“We have real time data to access through [data and administration service Grow, Inc.] so that when we do launch this pension offer in market, we’re going to be able to use that data to better deliver a service to pre-retirees and retirees.
Shrimski says the fund “feels good” about the opportunity to play a leadership position in the pension and retirement space.
“When we talk about Australians entering retirement, yes they need the right products, but they also need the right experiences which can help them get superior results, and depending on the complexities of their needs financial advice is something that also important,” Shrimski says.