Broadcast Retirement Network’s Jeffrey Snyder discusses the needs of the Australian retirement system with the Financial Services Council’s Blake Briggs.
Jeffrey H. Snyder, Broadcast Retirement Network
Good morning, welcome back to the broadcast Retirement Network. This is BRN AM for Thursday, February 29th, 2024. Joining me now to discuss this and a lot more, Blake Briggs is the Chief Executive Officer for the Financial Services Council.
Blake, it is great to see you. Thanks so much for joining us on the program this morning.
Blake Briggs, Financial Services Council
Thank you for having me on the show, Geoffrey.
Jeffrey H. Snyder, Broadcast Retirement Network
Yeah. Look, as I told you off camera or before we started, we’re absolutely fascinated with taking the best and learning from other retirement systems. And the Australia system is one that is, you know, there’s superannuation funds.
People hold them in very high regard. The FSC recently did a survey. And the survey, and I’m paraphrasing here, I want to get into it, basically said that individuals want to have control over their retirement savings.
But why don’t you give us a little bit more detail? Tell us about the perspective of the of Australia’s when it comes to their retirement savings.
Blake Briggs, Financial Services Council
Yeah, very happy to. So in Australia, we’ve got this extraordinarily successful pension system. Now, it’s not dissimilar to the 401k system in the US, but it is universal in that if you have employment in Australia, you have a pension plan called a superannuation fund here.
And 12 percent in a year’s time will be up to 12 percent of your salary is contributed into this pension plan. And that means we have a three and a half trillion dollar savings pool covering about the 20 odd million employed Australians. Now, the success of that is with rising markets, allocation to growth and equities.
The system has grown very strongly and the average Australian is now retiring with somewhere between 350 to 400 thousand dollars in savings. So from that perspective, it’s done an enormous job lifting standards of living and retirement and will continue to do so. The big debate that’s happening here now, though, is we’ve done this great job of designing a system that accumulates wealth for retirement, but we don’t have the availability of products or the strategies in place to help people when they retire.
And we have the same demographic change going on in Australia that you do in the US or Canada, where the baby boomer generation is hitting retirement now and they need more sophisticated financial products to help them. So that’s what our research really started to unpack.
Jeffrey H. Snyder, Broadcast Retirement Network
And and it’s it’s it’s so coincidental and so interesting. You know, you we unpack these issues every day here on the network and what you’re describing, the return, what we call here in the States retirement income, which is that decumulation, you’re you’re I wouldn’t say struggling, but you’re addressing that. And and I think recently the treasurer and I don’t know if that’s a treasurer of Australia, I would assume, came out with some ideas around a default.
Can you tell us a little bit about a proposal and what that could mean?
Blake Briggs, Financial Services Council
Yeah, so the federal treasury here, which is not dissimilar to the Janet Yellen in the UK, the secretary of the treasury. So the federal treasury here said, OK, this is a major systemic question about how we deaccumulate this large pool of savings. And so they he put out several options.
So the treasurer here, Jim Chalmers, put out several options. One of them was for the government to design a mandated product for the Australian market. So when you retire, your fund must offer a product with specific features.
Another option was that the fund itself can help guide you. So it can default you into a product unless you choose something else. And the last option is really around the value of financial advice at retirement, particularly when you have larger balances, complex tax arrangements, social security, eligibility questions thrown in.
And so what they’re trying to navigate is what is the best design taking into account those various options? Now, the research we did specifically went into, OK, what do consumers want in that situation? It’s probably not unusual.
There can be a disconnect between what politicians think is good for people and what the consumer actually wants for themselves. And no surprises, that came through really clearly in the research that we did. So what we found was 87 percent, so the vast majority of consumers, do not want the government telling them where to put their money in retirement.
They want access to affordable advice and information. They want options to be available. But inherently, they trust themselves to make decisions about what is best in their retirement and where they should invest the money than have a government default product or a government imposed product.
And the other interesting aspect of this as well is there’s been a bit of debate where some of the superannuation funds here would like to play a more interventionist role. So they really want you to be able to go to sleep on a Friday night the day you retire, wake up Monday morning and your pension is all set up for you and you transition seamlessly to the age pension as well as the superannuation income stream. And it’s a really strong pushback from consumers about that as well.
They actually want around that point that they’re making retirement decisions to be engaged with their fund and have it provide them information, but they don’t want the decisions to be made for them. And so that’s a really interesting sentiment that came through very strongly in the research that we did.
Jeffrey H. Snyder, Broadcast Retirement Network
Yeah, and it’s not indifferent to what we have here in the States. And I want to just pose back to you, you know, one size fits all sounds good. But Jeffrey Snyder, even though I’m not Australian, I’m an American, but Blake Briggs, we’re two different people.
We might be close in age, but you may have a family. I may not. I may want to work a little bit longer.
You may not. So that one size fits all approach maybe isn’t the best for everyone. And so when you’re coming up with solutions, you want to be able to provide a cornucopia, a myriad, if you will, of solutions for people.
Blake Briggs, Financial Services Council
That’s right. It goes to the significance of the financial decisions you’re having to make at that point in your life. So you have you may or may not have a spouse.
They may or may not have their own savings at retirement. You probably have your family home as well, which may be the biggest asset you own. You also then have questions about any tax consequences that arise at retirement, particularly if you’re selling shares that are held separately.
Then you have questions about your age pension eligibility. So there’s here there’s a universal minimum age pension, which is very modest. But then it tapers off depending on how much assets you have privately held.
Now, if you think through all those complexities, you really do need financial advice to help you navigate it. The average person should not be expected to be able to navigate that complexity. But a superannuation fund often doesn’t know all of those things about you.
So they might know how much money you have in the super fund. They may know whether or not you’re married, for example, but you don’t need to provide them all that information during the course of your life. So they need to collect a lot of information about you in order to decide what the best arrangement would be.
And by that point, you’re getting to personal advice, which really should be treating every household as unique and having its own financial affairs that need to be navigated. Now, one of the other problems we have here is the financial advice industry went through quite a lot of turmoil over the last 10 years, and there’s been quite significant layers of regulation imposed upon it in order to try to, I suppose, get it back onto the straight and narrow. And whilst that’s been successful in that the advice industry here is much more professionalised than it was a decade ago, it’s also made the cost of advice in Australia very high.
So the average financial plan will cost you, you know, five, six, seven thousand dollars, and it goes up from there if you’ve got more complex arrangements. So the vast majority of middle income consumers can’t afford personal advice here. There is a separate piece of work going on in the government in order to try to make financial advice more affordable.
But they really need to get that right before they start tackling this retirement problem on top of it.
Jeffrey H. Snyder, Broadcast Retirement Network
So I think we did a great job kind of talking about some of the challenges or things that are, I wouldn’t say challenges, things that are being worked through. And there’s always different points of view from policymakers. Where do you see this kind of unfolding?
Because like you mentioned, we have an ageing, you have an ageing society in Australia, we have an ageing society here in the US. These are important solutions. So where do you see things going in the next six to 12 months?
Blake Briggs, Financial Services Council
Yeah, so there are a couple of complex policy issues that the government will have to resolve in tandem with the industry that we need to deliver the solutions. Some of the big ones are the universal. They’re happening all over the Western world.
So we have longevity risks to manage amongst the retired population. We have a big cohort of baby boomers moving to retirement phase and drawing down their accumulated savings. But we also have these complex things around financial markets are impossible to time.
And every every consumer like to think they’d be able to. But the data always shows that by and large, people make the wrong calls. They sell at the bottom, they buy at the top.
And if you do that in your retirement phase and you can waste a lot of your accumulated savings. So we are going to have to go through this process here of organizing, OK, how do we make financial advice more affordable and how do we get more people access to it around their retirement? But how do we also build out the suite of financial products that can help people navigate their retirement and give them the information they need to choose wisely what’s in the best interest in their circumstances?
Jeffrey H. Snyder, Broadcast Retirement Network
And do here in the States, we’re dealing with something called financial literacy and we just started, you know, we’ve got 50 states and I think a majority of them, not yet a majority, have financial literacy and financial training in high school. Maybe and a little bit in college. How about in Australia?
Is this a big deal? You know, people managing their money, maybe seeking out others with financial advice. And you talked about the reform that went on the last decade or so in Australia.
But is this acumen, learning the acumen, getting educated, understanding what’s important when you’re doing a budget? Is that something that Australia is also tackling?
Blake Briggs, Financial Services Council
It is. There’s been a similar debate around basic standards of financial literacy for quite some time here. The problem is it’s an impossible nut to crack.
And I think, you know, the flush of cash that came through all of our economies during COVID stimulus era kind of proved that a lot of people can still make very important decisions, even if they have a good level of financial literacy. And, you know, you see things like a lot of the crypto investments that went on, some of the pumping schemes that our regulator in Australia took action over, I’m sure also happened in the US. And then you also have, you know, these are complex financial products and people, you know, like to try to try to hand it some of these things.
Look. In a lot of ways, that’s all OK, as long as people are aware of what they’re going into and making informed decisions, then they should be allowed to invest and take risk with their money how they choose to do so. I mean, it’s their savings.
Who are we to prescribe how it should happen? But then it’s just that question about how to improve these base standards of understanding of some of the complex design elements and the risks that people are taking on when they move through it. Now, during your young years, that’s probably OK.
You’ve probably got a capacity to wear out losses because, you know, you have the future potential income to earn later in life. But at retirement, it’s a much more serious proposition. Because if you take unnecessary risk or if you don’t understand the decisions that you’re taking at that point, you don’t have another decade to work or you really don’t want to be right.
You want to be spending those years enjoying your life and the benefits of your hard work. And that’s where some of the information that can be provided by your pension plan, government support, if it’s appropriate, that’s all got a role to play in these scenarios.
Jeffrey H. Snyder, Broadcast Retirement Network
Yeah. And I would liken it to, you know, when you go and buy a car, I don’t need to know how the car works, but I need to be able to compare it with another car. You know, I need to look at Toyota, compare it with Volkswagen or whatever, whatever car it is to be able to make my just my, you know, I need to be I need to be an informed consumer.
Doesn’t mean I need to be the person, actually the mechanic and that level, although having some people have that level of skill. But for most of us, when we buy a car, we want to know, is it going to run? Is it safe?
Does it have good gas mileage? Is it going to last for many years? And I think people need that, you know, probably need to be as informed when when selecting a financial provider or, hey, how are you going to use your retirement savings?
Because you don’t want to be taking all that money out, that four hundred thousand dollars that you were talking about on average. Or I think it was about that and then going out and buying a buying a nice yacht. I mean, that’s probably not a good, good, good.
Blake Briggs, Financial Services Council
What we have here, which I think is a little bit different from the US, is there is a very strict fiduciary obligation on financial advisors and other financial services companies to not steer a client towards the products manufactured by their own parent company. And so, for example, if you go to, you know, financial conglomerate A and you meet with one of their employed advisors, that advisor’s obligation is to you as a client to do what is in your best financial interests. And so that obligation means they can’t only choose from their own suite of products.
They actually have to look at the universe of products and they go, they have, you know, processes within business to sort through what’s more likely in different circumstances. But they do have to take into account the wider universe of products when making decisions or helping guide you through that decision making. It’s kind of relevant to your your car analogy, because if you go into a Holden dealership or a Ford dealership, you expect to be sold a Ford.
And so you kind of know that’s coming. But if you go into a financial advisor here, you might get sold, you know, anything from a Vanguard ETF through to an actively managed fund through to insurance product. And the advisor must be basing that on your personal circumstances.
So it’s a much more robust framework where consumers can have faith that their best interests are being taken, are being put in forefront in that decision making.
Jeffrey H. Snyder, Broadcast Retirement Network
Well, I hope I hope members of Congress and the Department of Labor are listening because we’re going through a similar debate. I’m sure you read the papers. We’re going through a similar debate here about fiduciary advice and the role.
Blake, we’re going to have to leave it there. Great to talk to you. Thanks so much for joining us.
And we look forward to having you back on the program again very soon.
Blake Briggs, Financial Services Council
No, thanks for having me. I appreciate it.
Jeffrey H. Snyder, Broadcast Retirement Network
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This story was originally reported by TheStreet on Nov 15, 2025, where it first appeared in the Retirement section. Add TheStreet as a Preferred Source by clicking here.
