The median cost for intra-fund advice equates to $2.81 per member per year, with the average member paying less then $10 each year, according to a report released by the Association of Superannuation Funds of Australia (ASFA).
As a result, there is no significant cross-subsidisation between members who receive advice for no charge or a nominal charge and those who do not receive any advice at all in a given year, ASFA found.
The bulk of the cost of scaled advice is covered by general administration fees charged to members by funds, or a combination of general administration fees and a specific fee for the service provided.
The survey also found Australians prefer simple advice about their superannuation, such as that provided by the current definition of intra-fund advice. ASFA chief executive officer Pauline Vamos said this type of advice was cost effective because it was limited to the very simple end of full financial advice.
While it does not replace full advisory services, it does enhance them, she added.
“This report reinforces why it’s important that intra-fund advice remains available to fund members,” Vamos said.
“It is an important element of our superannuation system, as it enables people to access affordable advice so they can make simple decisions about their accounts,” she added
According to Vamos, allowing funds to provide scaled intra-fund advice helps to reduce and share the cost, and allows more people to access this member service.
“But it must be limited, and this is why we welcomed the draft Future of Financial Advice legislation released last month, and applauded the Government for keeping the current definition of intra-fund advice intact.”
The report, which was developed in conjunction with Rice Warner, surveyed 25 superannuation funds, 19 of which are industry funds.
