The financial planning industry was surprised by Treasurer Peter Costello’s removal of end benefit tax from superannuation in the federal budget, Financial Planning Association (FPA) spokesman Jason Spits told Sunrise Exchange News.

KPMG tax partner Guy McAliece says the move will have a “drastic effect” on the super industry. He says the current superannuation tax regime is so complicated that most retirees require some form of financial advice.

The changes will be a boon for industry funds and self-funded retirees, he says, but potentially disastrous for the financial planning industry.

Financial planners are likely to suffer a big downturn in business before the changes come into effect on July 1 next year, as consultation takes place and retirees defer seeking advice. “Who in Australia will buy a complex retirement plan tomorrow?” Mr McAilece said.

But Mr Spits says the FPA is happy with the outcome. The core job of financial planners in the superannuation area has always been to construct over-arching financial plans and not to deal with complex incidental tax, which he describes as the “last hurdle” in the superannuation process.

Although the new regime will put pressure on the industry, Mr Spits says it will also encourage planners and consumers to focus on the bigger financial picture. To this end, the association is running a TV and print advertising campaign promoting “The value of advice”.