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Super frenzy puts planners at risk

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By Madeleine Collins
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2 minute read

Planners risk being sued for poor super advice when clients retire.

Hype around the July 1 super reforms is putting financial planners in danger of being sued for bad advice when their clients retire, a financial services lawyer has warned. Advisers need to help investors understand important issues in super so they can minimise this risk, Argyle Partnership lawyer Peter Bobbin said at a Macquarie Bank investment briefing yesterday.

On average, Australian men retire at age 58 and women at 47, so advisers need to warn their clients that super only becomes tax free at 60, Bobbin said.

They also need to be aware of the complex rules for self-managed super fund members.

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"We are in such a super frenzied environment, mum and dad [investors] run the risk of making the wrong decisions," he said.

"Advisers need to avoid the hype because they face long-term risks if they don't."

Bobbin gave the example of a landmark High Court decision handed down last month in which the court upheld a decades-old negligence claim by former Canberra public servant John Cornwall.

Cornwall sued the Federal Government for financial loss after receiving the wrong super switching advice from his employer in 1965.

The court dismissed an appeal by the government that the claim must be brought within six years of the action under ACT law.

Cornwall did not discover the advice was wrong until he retired in 1994 and began legal action in 1999, so that law did not apply, the court ruled.

Bobbin said as a result of the judgement he expects super fund members to give greater scrutiny to advice.

"There will definitely be an upswing in people examining the advice they've been given," he said.

Planners need to ignore the hype and bring balance back to the discussion, Bobbin said.

"Planners by and large do get it right because their client sits in front of them. It forces the planner to say 'there's no rule of thumb for you'," he said.

Super frenzy puts planners at risk
Planners risk being sued for poor super advice when clients retire.
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