The government’s proposal to allow APRA-regulated super funds and life insurers to field a “new class of adviser” providing limited advice to members effectively “ordains” super funds as the entities that will help 2.5 million Australians into retirement over the next decade, according to Conexus Institute* executive director David Bell. But with great power comes great responsibility.

“Yes, there’s roles for other parts of the system, but they’ve said they’re supportive of funds becoming a little bit more vertically integrated and not only providing a product solution but also advising and guiding their members in,” Bell told JANA’s annual conference on Thursday.

“If this all goes through, industry will have to be really well-governed to avoid the trappings that come with that degree of vertical integration. There has to be really good design and really good operations.”

To AustralianSuper head of retirement Jacki Ellis, “the devil is in the detail”, and there’s a lot yet to be worked through.

“Directionally, we’re really supportive and excited about that. But we’re not letting what we can’t do stop us from doing what we can do, and we’re kind of cracking on with it,” Ellis told the conference.

“But one of the things that some aspects of DBFO will do is just provide the industry with a lot more clarity about what is and isn’t okay, which just cuts down on the red tape and delivery times and the endless conversations with risk and compliance teams on the journey, and that will really help move the industry forward.”

AustralianSuper has acquired an AFSL and is in-housing its intrafund advice as the “first step” on the road to its “hairy goal” of delivering personalised guidance to every member by 2035.

“That’s a huge change for AustralianSuper, [both] philosophically and for how we work,” Ellis said.

AustralianSuper still has a largely outsourced model, but also has more than 2000 people working in it. While that means the fund has “deep, functional expertise” on every facet of retirement, there can also be a tendency to work in silos, Ellis said.

“The thing about retirement is that it’s not about a product thing over here, or what members when they’ve got to retirement; it’s our purpose, and something we need to get cracking on from the day that each of our members join us. It’s a whole of fund effort. We want the full bench strength being applied to delivering on our purpose.”

Estelle Liu, head of retirement solutions at AMP Super, agreed with Bell and Ellis that the proposed DBFO changes are a “step in the right direction”, she also noted that there had been a significant amount of change already and that at some point attention will have to turn to bedding some of that change down.

“I really think that the industry could benefit from the stability of not making massive changes or unwinding what’s already there, but trying to focus on addressing some of the unintended issues and making implementation smoother.”

*The Conexus Institute is a not-for-profit think-tank philanthropically funeded by Conexus Financial, the publisher of Investment Magazine.