What is the best way to measure the success of advice?

A number of clients who have successfully acted on their financial advice’s goals as well as a role of a human factor in helping with the goals setting, can be the most important criteria to measure the success of the advice.

According to Industry Fund Services (IFS) executive manager, Adrian Gervasoni, technology could largely solve for the strategy development, but the role of the human factor in the advice process going forward should be on the goals articulation.

“Our view on what the role the humans place is in the advice process going forward is the goals articulation and I think it’s been very difficult for digital advice tools to effectively engage with how you will help someone to set a goal,” he said.

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“If you look at the superannuation funds, almost every super fund has a retirement calculator, and a factsheet, and an interactive learning module which is all great but serious decisions that [the clients] make are often based on the emotions.

“At the moment, I think we have got humans responsible for things the technology could probably solve for and not enough focus is being put on the decision support as all this effort goes into trying to put forward an advice client the perfect strategy.

“You can measure success by the numbers of statements of advice reduced or, what we would believe is more important, is by a number of members [clients] who have actually taken action.

Gervasoni stressed that the clients’ decision to act on the advice they had received, whether it was paying down more of their home loan or contributing more to super or taking up an insurance, was the key factor in putting themselves in a better position.

“The advice itself is not a measure of success,” he added.

In its analysis on ‘Consumer-Centred, reimagining how Australian access help and advice’, IFS identified the key consumer preferences for accessing advice which included:

  • Online (self) discovery, which assumed having access to relevant and reliable information that was targeted to them, based on their personal situation and life stage;
  • Learning with peers which included the understanding of what similar people in their positions have done or are doing, and being able to share their personal experiences and learnings with peers; and
  • Easiness to engage experts.

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Oops. Someone better tell Adrian his intrafund advice team should not be giving advice on mortgage reduction. This is a breach of the sole purpose test.

Reducing a mortgage has nothing to do with superannuation (other than the advice to either pay down the mortgage or contribute to super). Advisers have an obligation to act in the clients best interest and if paying down the mortgage is in their best interest - that must be your advice.

And that’s the exact point Donga, should all Industry Super members be charged HIDDEN COMMISSIONS to pay for an individual members advice to pay down their home loan?
Of course not.
But that’s what you are saying.
The problems are three fold.
- HIDDEN COMMISSIONS charged to every member.
- Most Members not getting an Advice service for that Commission charge.
- Industry Super Funds being used to pay for Advice that is not part of Super.
But hey it’s Industry Super so we can guarantee ASIC will do nothing about it.

Don't know what you mean Ben the industry fund model (aka AMP tied adviser model of the 1980's is perfectly legitimate is it not??)......erm I suppose according to Hayne it is NOT OK.....unless of course you are an industry fund in which case go right ahead, nothing to see here, just us union guys with our snouts in an enormous trough..... quick, look over there there's an evil commissioned adviser (who never had a license in the first place).

God I love a level playing field......aaaargh

Advisers keep talking about 'hidden commissions'. What commissions do you think are hidden? All commissions / fees must be disclosed in a PDS - what commissions are not disclosed in the PDS? Please be specific and not just Bla Bla Bla.

Let me explain. When you garnish peoples members accounts that do not receive any advice to pay the wages of an adviser this is a form of remuneration paid by a product provider to a product facilitator. This is a commission when presented slightly differently.

And seriously Donga, when do the rules for advisers ever apply to the industry fund network, they never have, and I fear they never will. Hence my comment for a level playing field. This is why you can't find it in the PDS.

If a bank did this they would be evil and the devil incarnate, if an industry fund does it it's perfectly fine!!! NOT.

Wildcat - I presume you are aware of the Corporations Act in respect of the provision of personal advice to retail clients, so I won't explain.

Are you suggesting IFS provides personal advice to retail clients but does not follow the same compliance obligations as you?

The 'commission' as you call it, paid by industry fund members, has nothing to do with personal advice - it is for 'general advice' open to all members who require it (for god's sake please don't say the general advice is personal advice). The fee is fully disclosed in the fund's PDS. If a member doesn't want to pay the fee - they can go to a retail fund and pay higher fees (both fund and adviser). Do you know the amount of the fee per member per year?

If a member requires personal advice they pay for it - just like your clients pay you.

You recommend your 'preferred products' and there is no prohibition on that as long as the recommendation is in the client's best interest.

The same goes for an adviser who recommends an industry fund as their preferred product. By the way you may be surprised to know that since Industry funds (eg Australian Super) now pay advisers the ongoing advice fees from a member account for super advice, the shift by advisers to recommending industry funds has increased.

Because you are aware of the Corporations Act and therefore the new Breach Reporting obligations - why don't you report to ASIC that the fund has 'breached' in that it is making misleading statements, charging 'secret commissions' and providing personal advice disguised as general advice, but please don't reply by saying that ASIC will do nothing and it is in the industry fund pockets etc.

Dress up any way you like. These members pay a fee for a service they don't necessarily receive. Hayne ruled this as deplorable but apparently not for union/industry funds....just everyone else.

That's why the union funds are petitioning for carve outs of advice requirements even when they provide financial product advice.

And why do you think Australian super is building an adviser portal? They've realised how bloody hard it is to provide advice to retail clients who are aren't minted, that and it's a another channel to market to grow FUM.

Don't sit there for a second sit there and say it's a level playing field because if you do either you are a lobbyist, a patsy or not long in the game.

I am not a lobbyist, a patsy for Industry funds nor an adviser. You would be surprised what I have been doing for 30 years.
How many advisers were caught out for charging fees and not providing services? I can tell you more than were reported eg banks. No practice will ever tell you the compensation they had to pay after they did a review of 'fee for no service' in their business. This is what you are saying only the industry funds are doing - charging a nominal fee across all members but not providing advice. The PDS' are very clear you can get 'general advice' for no cost (other than the fee each member pays) if you want it and if you require personal advice you pay a higher fee. You may also be surprised at the number of practices who have sought to be appointed as an industry fund 'adviser' for members.

Ok so you are on the outside looking in. That makes more sense than actually being there and having a true understanding about the inequities in the system, the misrepresentations by media and ineptitude of ASIC.

There are bad apples in every basket, look no further than accountants and solicitors, all professions are bedeviled by such types including FP's but they, like accounting and law, are the extreme minority.

The bit you are missing is that it was the banks and insto's that stuffed advice in the first place in general and more specifically the fees for no service (FFNS) issue. These fees for no service were received by the banks and trousered by the banks but advisers were blamed. The FFNS came about as advisers moved on and the banks just kept the income stream under the old commission structure. It wasn't advisers that were primarily to blame, they just wore the BS and Hayne couldn't tell the difference either. Whether you take this as an excuse or a personal condemnation I'll leave with you.

Re: registrations, just because they are registered doesn't mean they support industry funds, again deeper understanding is required prior to making comments.

Intra-Fund advice is not General Advice, it is Limited Personal advice. It is provided based on a member's individual circumstances (limited to the product they are selling) in a Statement of Advice, created by a financial planner employed by either the industry fund, or an associated entity. The wage/salary paid to the adviser is paid from all of the members' fees paid to the industry fund(s), and hence partly paid by other members, who do not necessarily receive any such service (and would not necessarily be given the option for such service).

Hence.... "secret commissions".... an undisclosed payment to financial planners (or their parent company) for services accessed by a (possibly preferenced) few.

This is what we, as unaligned financial planners call a non-level playing field!!! (...because if it was us, we would be banned from the advice industry and fined to bankruptcy by ASIC.

Dear Donga / IFS / Industry Super, your massive amounts of HIDDEN COMMISSIONS charged to every Industry Fund members, mostly for no service is a disgusting rort.
These HIDDEN COMMISSIONS, cover both General Advice Sales & INTRA FUND ADVICE SALES. And Donga, it is even scarier to hear you say that there is no Personal Advice, as Intra Fund Advice Sales you provide is most definitely Personal Advice Sales.
So yes Personal Advice Sales paid for by HIDDEN COMMISSIONS.
If you want to stop the Real Advisers against this then stop the massive HIDDEN COMMISSIONS rort that most of the Industry Fund members pay but get zero Advice sales service for.
Why don’t IFS Advisers charge each super member they work with a fully disclosed fee ?
And why don’t IFS Advisers get all the Advice fees signed off by each super m we that get LS the advice?
And why don’t IFS Advisers only charge the super members that get Advice and not steal money from members that DO NOT GET ANY ADVICE SALES ?
Industry Funds have been so high and might against Commissions for 20 years, yet now Industry Funds are the biggest Commissions charges in the whole Super Industry.
What a Great scam Industry Super !!!!

Aren't industry fund services the separate advice arm that charge direct fees to provide personal advice above intra-fund advice?

Intra-fund advice is a rort but this is misguided.

Our friendly Comrade Donga says that IFS providing General Advise Sales, so yes IFS most definitely is paid HIDDEN COMMISSIONS.
And Donga doesn’t even understand that Intra Fund Sales Advice = Personal Advice.

..... and when advisers did this, it was called "Grandfathered commissions". :P

Spot on Donga, and that's 100% why Industry Super Fund Advice needs to be more heavily regulated, and I would say even banned or made clear they're just brainwashed advisers flogging Super fund....from what I've seen is that Best Interest Obligations, and Industry Super fund "advice" does not go together.....when was the last time an Industry Super Fund Adviser product flogger referred someone to a Financial Planner. They'd have to be plenty of time where the complexity and scale of advice would need the services of someone who can focus outside the Hesta Balanced Option.

Yeah.... what a lark. Choose the most appropriate investment option from a universe of 6 options. What a challenge!!! LOL

Please, Please do not start carrying on about IFS and filling the comments with vitriol. Most readers are sick of this becoming a place to 'have a go' at someone or something. Advisers are supposed to be professional - act like it.
If you disagree with the comments put forward a better argument.

Best comment I have read here in 6 months...

Try this for a better solution - completely eliminate product providers from
1) Providing any Advice.
2) Charging members for advice and having no obligation to provide advice to the members charged for that Advice.
Lets put ourselves in the boots of a product provider and having a choice as to provide advice to the member - reduce the mortgage or make additional contributions to the product????
Product provider is completely and utterly conflicted and no BID exists - all paid for buy hidden commissions. Defend if you like Donga - please.

Well said Funny....you're spot on in that they're solely interested in selling product..they don't sell advice...Having worked as an Adviser for a member firm, right now these so called "advisers" are getting training that brainwashes them into thinking the only strategy is adding to super. The training goes as follows,,,identify problem...verbalize and repeat problem..offer solution being salary sacrifice into Hesta Balanced fund.

I know - my wife has a Hesta kept for insurance - called to say don't close as no regular contributions and no SGC. Sales lady tried to sell her Sal Continuance Insurance on the same call even after knowing she did not work. Suspect we have all seen similar situations.

Donga, whatever makes you sleep well at night but professionalism is not standing by whilst others act unprofessional. Given the amount of regulatory intervention and that we've reached a point where ordinary Australians can no longer afford Advice, the time for being "polite" is way over. I will not stand ideally by and see these clowns destroy genuine human lead, face to face advice because his definition of advice is adding money to Hesta Super.... More broadly, It's time to bring on the Vitriol and make some changes..and if you've got a problem with that have a look at yourself in the mirrow.

Hey IFS / Adrian, with that human factor of Advice would be great for Industry Funds to actually present the real cost and real fees of the advice and have the super member sign off on the fees and pay for their own advice.
But no seems the HIDDEN COMMISSIONS charged to every member is the favourite scam.
HIDDEN COMMISSIONS charged to every member when IFS / Adrian know most of their members don’t get any advice.
Compare the Pair, Industry Funds HIDDEN COMMISSIONS to pay for Advice For No Service for most members.
What a disgusting Rort !!!!

With apologies to Donga, the truth hurts.

The best way to measure the success of advice?
Your clients refer you and speak effusively to others about the value you deliver them and the invalueable experience the have by working with you.

You have to put this in the context that Mr Gervasoni mission is 1) Increase FUM into Industry Super funds by all and any means possible. 2) Increase client retention and maintain FUM 3) Destroy face to face advice and increase call centre advice channels..4) Decrease regulatory oversight by any means possible in favor of lower cost delivery methods . Won't be any mention about the needs of Australians, the advice industry or their members in that remit.

IFS is the closest we have to a 2012 era dealer group. A testament to what advice dealer groups used to be - same processes, same attitudes. same focus on the money. So when you look at IFS you are looking at what the industry used to be ten years ago and get a sense of how far or not practices have evolved since them. IFS is on it's own journey to become relevant.

Dealer groups in 2012 still allowed a Financial Planner to recommend or maintain external products. Not sure Industry Super has ever one recommended rolling out of Industry Super.

I thought I would clear a few things up given I am an industry fund adviser.
1-Having worked for an IFA practice the licensee standards and advice process are pretty much the same…product advice needs to consider alternatives and yes we do need to recommend members roll out of the fund I work for when an alternative is more appropriate.
2 - I am a retirement adviser and therefore charge the member for my time. Typically in a fund there is both an intrafund team providing basic investment choice, contributions and insurance advice (often for no direct charge) and a comprehensive-retirement team that provide advice on a broad range of issues (on a few for service basis).
3- Intrafund is lawful and both treasury and ASIC have been on record of late reaffirming the validity and importance of this advice. I would be keen to understand which advice firm would step up to provide basic advise if super funds didn’t? Instead most have sought to rationalise their client base to sure up the profitability of their practice.
4-Scrutiny on our sector is immense, Tim Wilson has been leading an inquiry into the superannuation advice sector for 18 months. So far no significant issues have been identified, which supports the findings of the RC.
I know this isn’t the truth many here want to hear but do some research and speak to an adviser or two employed by super funds and you will see they breathe the same oxygen and are held to the same complex and burdensome regulatory framework as you. The fact that thousands of advisers have signed up to referral panels with industry funds shows there are some advisers keen to service the advice needs of super fund members.

Really?????? Really?????

How many enhanced FDS's have you issued? How many trustee fee approval forms have you lodged? What is your % for recommending a product provider by your employer vs a non aligned product? Do you know what an ongoing service agreement is? Have you ever recommended a guaranteed renewable life insurance offer to a client that is soooo much more in a members best interests as opposed to the rubbish IFS policies that cost the same?

I grant you we both breathe the same oxygen but live on different planets.

PS if you worked for an IFA practice 2 or more years ago you can't actually understand how crap it is now as it is infinitely worse over the last 24 months.

PPS this is not a shot at you personally, just the bulls*!t system you work in.

Industry Fund A, nice reply and thanks for the insight. I remember having a discussion with an Industry Fund employee adviser and he also seemed to believe in himself, but was also simply selling the in house product all day and had no idea if the fees he charged even covered his salary, let alone the rent etc. From what I learnt, you are paid by the product provider, the rest is does not matter you will not be moving much FUM out of your employers product if you like your job and value your bonus.

Your points
1) what % of FUM coming across your desk to you roll out of your employers product?
2) When you charge, do you cover your costs each year? ie, Is the product paying your rents etc? Do you even know what costs need to be covered or does the product manufacturer underwrite your role? Intrafund team is a no brainer for the Product provider as getting contributions in the door is a must for all product providers - sell sell sell. Comprehensive team would be busy with the few.
3) "I would be keen to understand which advice firm would step up to provide basic advise if super funds didn’t?" Spare me the good Samaritan speech of this please. We had many clients paying commission and we managed to looked after them very well for many many years. Commissions are now BANNED for many of us - but not in your world it seems where you charge others (all the members is that right) to help this small portion (what % of the member base do you help each year) by selling only the in-house product. Intra Fund advice looks to me like your selling - not acting in the best interest of the individual member as all you consider is more in-house product - correct?
To settle the argument - if Intra Fund Advice is so valuable a service, simply charge each member the fee for the service when the member requests the service - that way, many many members would potentially be better off in retirement having not paid these fees from their retirement capital. Perhaps you can justify why your needs for income is greater the members need for their capital to remain without your Intra Fund Fees?
4) If it is true that "thousands of advisers have signed up to referral panels with industry funds...." just goes to show that despite members being charged a fee for your advice, you still can't provide these members the decency of providing them with the service.

I'm sure you are doing a great job and that is fine, but please, your comment in point three about your doing the work us capitalist Financial Planners wont is the reason I today will be doubling my efforts to pester my local Federal Member - I want a level planning field and if this industry is to become a "profession", then having Dr's employed by the drug company and righting scripts like you must stop.

"Dr's employed by the drug company and righting scripts like you must stop".

PMSL laughing and bang on.

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