Salaried advisers employed by industry funds to provide intra-fund advice have been likened to the old ‘tied agents’ who were a part of the industry nearly 30 years ago by senior adviser at Western Australian financial services firm, Roxburgh Securities, Steve Blizard.
Blizard has published an analysis of the current state of play with respect to intra-fund advice and has questioned whether members of some superannuation funds are aware they might be paying for advice they are not actually receiving.
Blizard has pointed to proposals put by the Australian Securities and Investments Commission (ASIC) that intra-fund advice costs be included in disclosure of administration fees and the fact that a number of major industry superannuation funds have issued new Financial Services Guides (FSGs).
He said that an examination of those FSGs showed that a number of funds could pay performance bonuses to their advisers, on top of their salaries, from administration membership fees paid by fund members.
Blizard said that with the growing shift to intra-fund advice, concern was being expressed that the large institutions, including the Industry Super Funds were creating an entirely new AMP tied agency structure that might not always put the client’s interests first.
“For example, if a retiree with a large super fund was influenced by the intra-fund adviser to roll his funds into an Industry Fund, will this really meet their retirement goals, compared to investing in a self-managed fund with an investment allocation that outperformed that Industry Fund?” he asked.
“If the same retiree wanted to invest in a higher performing Industry Fund (not connected to the intra-fund adviser), would they decline to give advice to that investor? If a fund member found their group insurance premiums were far too expensive, would the intra-fund adviser be able to recommend lower cost personal insurance premiums elsewhere?
“Would the intra-fund adviser earn performance bonuses for redirecting that member elsewhere?”